IMF loan to South Africa requires extra accountability and transparency, DA says
JOHANNESBURG - The $4.3 billion loan South Africa has secured from the International Monetary requires extra accountability and transparency from the government in how it is used, the main opposition DA said on Tuesday.
In a statement, the party also noted this was the first time since the advent of democracy in 1994 that Africa's most advanced economy had had to resort to IMF borrowing, calling it "a profound signal of the frailty of our economy following years of mismanagement, bad policy and corruption".
The IMF approved South Africa’s request for emergency funding under its Rapid Financing Instrument on Monday, saying this was a low interest loan that would contribute to the government’s fiscal relief efforts without impacting on its sovereignty as it grappled with the impact of the Covid-19 pandemic.
It said there was a pressing need to strengthen economic fundamentals and ensure debt sustainability by carrying out fiscal consolidation, improving the governance and operations of state-owned enterprises and implementing other growth-enhancing structural reforms.
The coronavirus crisis heightened the urgency of implementing these efforts to achieve sustainable and inclusive growth, the IMF added.
On Tuesday, DA Member of Parliament and finance spokesperson Geordin Hill-Lewis said the loan approval came amidst growing evidence of a "pervasive corrupt feeding frenzy" by individuals linked to the ruling ANC of relief funds meant to mitigate the impact of Covid-19.
"It is essential that the National Treasury is completely transparent about the disbursement and use of this loan as well as all Covid-19 relief funds," Hill-Lewis said.
He urged Finance Minister Tito Mboweni to publish detailed monthly reports on the disbursement of relief funds, including how they were spent, which companies were beneficiaries and who the directors of those companies were.
Mboweni should also appear regularly before Parliament's standing committee on finance to table these reports and face rigorous scrutiny and oversight from legislators, Hill-Lewis added.
He said the IMF's stipulation on Monday that the government manage the fund's emergency financial assistance with full transparency and accountability "is a clear indication that ANC corruption is now an issue of international concern and embarrassment".
"This corruption is a powerful reminder of why the ANC government must now rely on the IMF and why we will need a full-scale IMF bailout in the coming years unless there is major economic reform and real action on corruption," the DA legislator added.
Earlier on Tuesday, the South African Institute of Race Relations (IRR) said it welcomed what it called the unambiguous message from the IMF in favour of growth-enhancing structural reforms as it approved the loan.
It said this echoed the thrust of the IRR's own communications through diplomatic and other channels over the past two months to alert prominent IMF donor nations to their critical role in strengthening the drive for solution-based support and efforts to overcome fundamental weaknesses in the South African economy.
"The IRR has led the calls for linking sensible pro-growth reforms to IMF support," the institute's deputy head of policy research Hermann Pretorius said.
"This is by no means the end of our efforts to ensure maximum accountability by the ... government, but we are heartened by the IMF’s willingness to not let the principle of accountability be lost. No-one should miss the significance of the IMF’s announcement and what this means for the future.”
He said the government should consider itself on notice that "destructive" policies such as expropriating land without compensation "will not be tolerated, not by South Africans suffering under the mounting effects of a decade of economic lockdown, and not by the IMF donor nations whose support in this difficult time gives ordinary South Africans a stronger hand in demanding a free and open economy that works".
- African News Agency (ANA)