“Our adjustment of the repo rate benefits borrowers; if you don’t have debt, you’re not going to benefit from an adjustment in the repo rate,” Kganyago said in a webinar on Sunday. We could “say that it stimulates demand and then because it stimulates demand more goods are produced and so forth, but if you are providing this and the economy is locked down, you don’t see the effect of it,” he said.

The Reserve Bank has relaxed accounting and capital rules to release additional money for lending and more than doubled its holdings of South African government debt, helping to bring down borrowing costs in the domestic bond market.

Providing Support

While the monetary-policy measures implemented by the central bank are temporary in nature, it is not yet considering the conditions that would allow for them to be withdrawn, Kganyago said. “What is important for us is to provide this support for the economy,” he said.

Gross domestic product is now projected to contract 8.5% this year due to the virus and the lockdown, Sim Tshabalala, chief executive officer of Standard Bank Group, said on the webinar. South African lenders’ revenue will decline and bad debts will increase, he said.

“A large proportion of our customers have not been paying their debts as before,” Tshabalala said. “Naturally that’s because they are no longer working. Small-to-medium enterprises are closed so they are unable to pay and even some corporates are finding themselves in some difficulties.”