EFF calls IMF loan ‘biggest political blunder’, DA says it’s watershed moment for SA

The $4.3 billion (R70 billion) loan government received from the International Monetary Fund’s (IMF) executive board was the biggest political blunder in the history of South Africa, the EFF said in a statement.

The EFF has cautioned that loans from the IMF always come with “neoliberal” and “neocolonial” conditions. The party added that whether immediately or in the long run, the IMF would impose conditions on the country, “which will certainly undermine South Africa’s macroeconomic and fiscal policy sovereignty”.

“[President Cyril] Ramaphosa is proving to be the biggest danger to South Africa’s sovereignty against neocolonialism. Whilst he is allowing his colleagues and family to loot state resources, he is also sacrificing our country to the highest bidders on the altar of capitalist convenience,” the EFF said in its statement.

“The budget tabled by the Finance Minister [Tito Mboweni] in Parliament in June only allocated R43.2 billion additional funds to the budget. R32 billion was allocated to the national government, and R11 billion was allocated to the local government.

“The rest of the funding was provided through reprioritisation process while many programmes’ budgets were cut. Yet the government borrowed twice the amount of money allocated in the budget.”

The Covid-19 loan support from the IMF came after months of engagement between Treasury and IMF management.

The loan is part of R95 billion being sought from multilateral institutions to support job creation and protection for businesses negatively impacted by the Covid-19 pandemic, it was previously reported.

These loans account for the government’s R500 billion stimulus package to support the economy.

“Government is borrowing money without a believable plan to deal with already uncontrollable debt or economic recovery. It is most concerning that the rush to borrow money from the IMF was considered the first option when there is sufficient money in the domestic capital markets, current account in surplus and reserves. South Africa is not short of money to warrant borrowing money from the IMF,” the party said.

Arguing that Mboweni has mislead the country by suggesting the loan from the IMF is a low-interest loan, the party said the IMF is dollar denominated, “and will have to be paid back in the dollar. In the absence of sound and practical economic recovery strategy, the Rand is unlikely to stabilise”.

International concern, embarrassment

Meanwhile, the DA’s Geordin Hill-Lewis said the loan was a “watershed moment for our country”.

“The IMF, in its statement last night, called on the government to ‘manage the IMF’s emergency financial assistance with full transparency and accountability’. This is a clear indication that ANC corruption is now an issue of international concern and embarrassment,” he said.

The DA said it wanted Mboweni to publish detailed monthly reports on the disbursement of Covid-19 relief funds, how it was spent, which companies were beneficiaries and who the directors of those companies were.

They also want him to appear regularly before the Parliamentary Standing Committee on Finance to table these reports and face rigorous scrutiny and oversight from MPs, and to appoint a Special Inspector General for Covid-19 expenditure, with powers to interdict corruption before it happens.

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