AFRICAN MIRROR REPORTER
THE South African government’s battle to save an economy and livelihoods battered by COVID-19 has received a major boost.
The International Monetary Fund (IMF) has approved a $4.3-billion emergency loan to assist the country to mitigate the social and economic impact of the pandemic.
The IMF loan has however generated debate in South African where some, including trade unions aligned to the ruling ANC, have expressed reservations.
The South African government said the IMF low-interest loan would contribute to the government’s fiscal relief package while respecting the country’s decisions on how to best provide relief to the economy and those affected by the crisis.
Last month, Finance Minister Tito Mboweni tabled a special adjustments budget in Parliament and unveiled measures in terms of which public spending priorities and budgets would be reordered and reprioritised towards Covid-19 related interventions and economic recovery efforts.
Following the IMF decision, Mboweni said: “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. Going forward, our fiscal measures will build on our policy strengths and limit the existing economic vulnerabilities which have been exacerbated by the Covid-19 pandemic.”
The IMF loan is part of the R95-billion the country seeks from multilateral institutions to support, among others, job creation and support as well as businesses negatively impacted by the pandemic. South African has also received a $5-billion from the New Development Bank and a $1-billion from the New Development Bank.