R70bn IMF loan will go towards health, job creation, economy - Mboweni
The IMF on Monday approved South Africa’s request for a $4.3 billion loan, which translates to about R70 billion.
JOHANNESBURG – National Treasury on Monday said that the multi-billion-rand loan from the International Monetary Fund (IMF) would be used to forge a new economy and mitigate further harm from the devastating COVID-19 pandemic.
The IMF approved South Africa’s request for a $4.3 billion loan, which translates to about R70 billion.
Last week, the African Development Bank approved a R5 billion loan to the South African government to help fight COVID-19. In June, the New Development Bank (NDB) – formerly called the BRICS Development Bank - also approved a US$1 billion loan to SA to help the country fight the pandemic.
The loan comes after President Cyril Ramaphosa roped in the Special Investigations Unit (SIU) to investigate allegations of corruption and tender irregularities linked to the COVID-19 relief fund.
And while the SIU investigates the looting of relief funds over the past few months, critics warned these new loans could be ripe for the plundering.
Treasury said that the IMF loan was a low-interest loan, which would contribute to government’s R500 billion fiscal relief package.
Finance Minister Tito Mboweni said that the money would support health and frontline services, protect the most vulnerable, drive job creation, unlock economic growth through reforms, and stabilise public debt.
“Government’s COVID-19 economic support package directs R500 billion straight at the problem. This is one of the largest economic response packages in the developing world. The South African Reserve Bank has reduced interest rates and made it easier for banks to lend money, and supported liquidity in the domestic bond market. Government spending and tax proposals, as well as the loan guarantee scheme and wage protection measures, are providing protection to workers and the poor, while assisting to stay afloat during these tough economic times,” Mboweni said.
The minister said going forward the country’s fiscal measures would build on policy strengths and limit the existing economic vulnerabilities, which have been exacerbated by the COVID-19 pandemic.