The National Treasury may soon be required to get approval from Parliament before it signs any loan agreements with multilateral finance institutions in the near future.
This was revealed by the chairperson of the select committee on finance, Yunus Carrim, yesterday during the Parliament’s consultation with the International Monetary Fund (IMF).
These consultations are part of the IMF’s Article IV Meeting with the South African government to look at political and economic developments, reform agenda and economic priorities in the country.
The IMF was represented by the head of research in the African Department, Papa N'Diaye, and the IMF’s resident representative in South Africa, Max Alier.
Carrim yesterday welcomed their first engagement with the IMF, especially after learning that it had also consulted with the labour movements and the NGOs to develop its policy.
However, Carrim said they were somewhat sceptical about the IMF’s financial assistance to developing countries as it saddled them with generations of debt.
“We also, well at least the majority party, feel that the IMF is not democratic enough, that the developing world still, thousand years of colonialism, dictates the terms,” Carrim said.
“And actually it benefits but also disadvantages the developing world with some of its conditions. You know the whole argument. A typical social democrat would say that about the IMF and the World Bank.
“So I think this is long overdue. I welcome it. But you see, we are Parliament. Ultimately we pass the Budget. It’s what we have been raising before. This is an item on the agenda for us in the ANC.”
In 2020, the IMF approved a R70 billion loan for South Africa through its Rapid Financing Instrument to help the country manage the immediate consequences of the fallout from Covid-19.
South Africa’s gross debt stock is projected to increase from R4.73 trillion in 2022/23 to R5.84trln in 2025/26, and some of this debt comprises loans from the IMF and the World Bank.
“We have been raising this and we want to put it firmly on the agenda in the new term. That you see, these World Bank and IMF loans, the countries cannot just get out. It can’t just be done with governments, Parliament has to have some say,” Carrim said.
“So we are alerting you to that thinking. It’s been on for a while but we haven’t done enough because we have a thousand (other) things to do.”
Meanwhile, DA MP Dion George raised a number of concerns when N’Diaye asked the committee what would make the social compact work in South Africa.
George said they were concerned about policy dithering on issues that impact investor confidence the most.
“What is eroding the (social) contract in our view is the erosion of individual )property] rights. We do not believe that property rights and freedom of speech, although they are protected to a large degree, have been protected enough,” George said.
“What also makes investors concerned is expropriation without compensation, and those are big property rights issues that make investors nervous, both domestic and internationally.
“Then in terms of the government’s role in the economy, the government sees itself as a very central part of the economy in the development of the so-called developmental state.
“We don’t believe that is possible because we don’t believe that the government is capable of doing that and we don’t believe that it works. So we believe that the government needs to do its fundamental job, and that is to provide infrastructure, education, healthcare, provide security, and then get out of the way.”