South Africa's $2 billion (about R16.5 billion) commitment to an International Monetary Fund (IMF) “firewall” was not a gift but a sound financial investment, the presidency said on Wednesday.
“If the IMF uses the funds, the money is lent to the IMF and not a gift... (and) for all of this time the money will be earning interest for South Africa,” President Jacob Zuma's spokesman Mac Maharaj said.
“The capital of the loan will ultimately be repaid to South Africa. It's like lending money to a very strong bank. This is not a risky loan.”
Zuma committed some of South Africa's reserves at the G20 summit, a meeting of the world's greatest economies, in Los Cabos, Mexico on Monday.
At least $430 billion had been set aside to stave off the risk of another financial crisis, which would likely lead to a sharp decrease in global growth and rising unemployment.
IMF members could access the funds through a temporary loan, with conditions, and the reserves were not earmarked for any region.
While the news was welcomed by Business Unity SA as an important step in maintaining stable economic growth, the Congress of SA Trade Unions' (Cosatu) felt South Africa should be a beneficiary rather than a contributor.
“The decision must be reversed and the US2bn used to alleviate the plight of the poorest South Africans and to invest in the restructuring of our economy,” spokesman Patrick Craven said.
Maharaj re-iterated that the funds were part of foreign reserves, did not require an additional budgetary allocation and were critical in keeping the rand stable.
“If the global economy falls sharply, there is a serious risk that we will lose more jobs. In the last global recession we lost one million jobs. Our contribution to the IMF is intended to help stave off this kind of crisis happening again.”
The wealth of a country was not necessarily an indicator for how much should be set aside for the IMF, he said.
China had a lower per capita income than South African and yet, had set aside US43bn.
India was “considerably poorer” and was allocating US10bn.
“Like China and India, South Africa is a responsible global citizen. We are in the G20 to support global stabilisation and growth. We need to continue to do our duty.” - Sapa