If there is one positive to come out of the government’s borrowing of R70 billion from the International Monetary Fund (IMF), it is the hope of some long-awaited transparency in how public money is spent.
Although the IMF did not impose any of its much feared draconian policies as conditions for the loan, the length of time it took to be granted suggests the government had to lobby for some time and promise voluntary fiscal reform.
As well as saying that it is “open to introducing a debt ceiling in addition to the nominal spending ceiling currently in place” to decrease the debt-to-gross domestic product ratio, the government said it would act to trim the public wage bill and support to state-owned entities would be “strictly conditional on meeting key performance indicators to improve their operational and financial health”.
Quite how Tito Mboweni et al intend to reduce the wage bill while public sector trade unions are already challenging it over its failure to increase members’ salaries remains to be seen.
The dispute is set to return to the Public Service Co-ordinating Bargaining Council on August 28.
The government also promised the IMF it would tackle the Eskom issue by expediting its unbundling to address efficiencies and reduce its threat to the economy.
Not surprisingly, the announcement of the loan’s approval – coming at the same time as revelations that presidential spokesperson Khusela Diko’s husband had been in line to receive over R100 million in government contracts for personal protective equipment, and as the State Capture Commission of Inquiry resumes work – was met with derision and criticism over fears the money would be looted.
However, the government says it would keep the IMF abreast of spending and ensure the borrowed money is used as intended, through regular reports and audits and an assessment by the auditor-general. The government would also publish details of all Covid-19-related contracts, including successful companies and their owners.
This is the type of transparency South Africans have been calling for for decades. Implemented sooner at all levels of government, the state would have been spared billions of rand in corrupt contracts awarded to ANC cronies. It appears the feared IMF loan could in fact be a blessing in disguise.