(Bloomberg) --

South Africa Treasury expects a relief package for businesses and individuals affected by this month’s deadly riots to cost 38.9 billion rand ($2.6 billion).

Additional spending will amount to 36.2 billion rand, while 2.65 billion rand will be reallocated from within the budget, Edgar Sishi, the acting head of the budget office, said in an online briefing on Wednesday. The program won’t require additional borrowing, Dondo Mogajane, the Treasury’s director-general, said at the briefing.

At least 330 people died and thousands of businesses in the commercial hub of Gauteng and the eastern KwaZulu-Natal province were looted or burned down in unrest that erupted on July 10. The turmoil could cost the country more than 48 billion rand in lost output, South African Revenue Service Commissioner Edward Kieswetter said at the briefing.

Tax collections have exceeded expectations this year, especially from the mining and financial services industries, and the additional revenue will be sufficient to fund the relief package, Kieswetter said.

While order has largely been restored, prolonged or repeated unrest could pose risks to the country’s sovereign debt assessment, S&P Global Ratings said Monday. The nation’s debt is rated at the lowest level since it first obtained credit ratings 27 years ago. Economists see the damage shaving as much as one percentage point off economic growth this year. 

The Treasury’s briefing came after President Cyril Ramaphosa on July 25 unveiled a series of relief measures including the reinstatement of a monthly welfare payment of 350 rand until the end of March and a 400 million-rand state contribution to a humanitarian relief fund. He also announced support for uninsured businesses and other tax measures.

The welfare payments will cost the state 27 billion rand and the government will provide 5 billion rand to businesses, Finance Minister Tito Mboweni said at the briefing. The Treasury will increase allocations for the police and army to maintain stability, he said.

The knock-on effect of the unrest could heighten the fiscal vulnerabilities of Africa’s most industrialized economy. Public finances deteriorated over the past decade as loss-making state-owned companies including Eskom Holdings SOC Ltd. and South African Airways received a series of bailouts and as the government repeatedly failed to rein in growth in public-sector wages or tackle graft.

The Treasury in February predicted that debt will peak at 88.9% of gross domestic product in the 2026 fiscal year. Policy makers still see economic output returning to pre-virus levels in 2023, Mboweni said.

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