The South African market continues to attempt to salvage the Rand, following a slew of market interventions by the Reserve Bank last week.
The Rand has hit an all-time low amidst the COVID-19 pandemic, which has massively impacted markets as the nationwide lockdown ensues. Sitting at R17.82 to the US dollar, the Rand has continued to plummet, subsequently affecting the economy greatly. In an attempt to salvage the state of the economy, the South African Reserve Bank (SARB) conducted a slew of market interventions, which could possibly make a difference.
The most significant development within the South African economy came from Moody’s Investor Service on Friday, 27 March 2020. Moody’s had downgraded the Government of South Africa’s long-term foreign-currency and local-currency issuer ratings to Ba1 from Baa3.
In a statement on Sunday, 29 March 2020, Finance Minister Tito Mboweni announced various measures which have been put in place for the betterment of the economy, following Moody’s’ downgrade. These include; the introduction of a tax subsidy to employers of up to R500 per month for the next four months for those private sector employees earning below R6 500 under the Employment Tax Incentive and the South African Revenue Service (SARS) is set to accelerate the payment of employment tax incentive reimbursements from twice a year to monthly to get cash into the hands of compliant employers as soon as possible.
Moreover, tax compliant businesses with a turnover of R50 million or less will be allowed to delay 20 percent of their employees’ tax liabilities over the next four months and a portion of their provisional corporate income tax payments without penalties or interest over the next six months.
See the full statement here.
Sayushka Naidoo
s.naidoo@politicalanalysis.co.za
