Picture: Yuri Gripas/Reuters/African News Agency (ANA) Archives
Picture: Yuri Gripas/Reuters/African News Agency (ANA) Archives

IMF R70bn loan: the ‘biggest political blunder’

By Samkelo Mtshali Time of article published Jul 29, 2020

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Johannesburg - Political parties have continued to lament the International Monetary Fund’s decision to approve South Africa’s R70 billion loan with the EFF, saying that loans for the IMF always came with neo-liberal and neo-colonial conditionalities.

The party has described the loan as the “biggest political blunder in the history of South Africa”.

Party spokesperson Vuyani Pambo said that they rejected the decision of the IMF’s executive to approve South Africa’s request for the R70.7bn.

“The loan from the IMF is in addition to a loan of R5bn from the African Development Bank and the R16bn loan from the New Development Bank. In total, the government has borrowed more than R90bn with 77% of the borrowed money coming from the IMF. This is the biggest political blunder in the history of South Africa. Loans from the IMF are always neo-liberal and neo-colonial conditionalities and South Africa will not escape from this reality.”

He said that the government was borrowing money without a believable plan to deal with already uncontrollable debt or economic recovery.

Pambo added that they were concerned that the rush to borrow money from the IMF was considered as the first option when there was sufficient money on the domestic capital market, current accounts in surplus and reserves.

He maintained that they had warned the government on numerous occasions about the “indisputable evidence” that the involvement of the IMF and World Bank in different countries had led to a massive impoverishment of the majority of the citizens.

Geordin Hill-Lewis, DA Shadow Minister of Finance, said that the IMF’s approval of the loan to South Africa was a watershed moment for the country.

“This is the first time since before 1994 that we have had to resort to IMF borrowing and is a profound signal of the frailty of our economy following years of mismanagement, bad policy and corruption.

“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,” said Hill-Lewis.

He called on Finance Minister Tito Mboweni to publish detailed monthly reports on the disbursement of Covid-19 relief funds.

“He must appoint a special inspector-general for Covid-19 expenditure, with powers to interdict corruption before it happens, as the DA proposed in May.

Stanford Mazhindu, the spokesperson of the trade union United Association of South Africa (Uasa), said: “The IMF loan to support job creation, protection and businesses that are negatively impacted by the Covid-19 pandemic, comes at a time when South Africans are worried about the misappropriation of funds set aside for these very reasons.

“While Uasa understands that South Africans need assistance, the very real possibility that some of this money might not reach its intended recipients or services is a thorny issue that needs to be addressed in advance,” Mazhindu said.

Political Bureau

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