Mboweni: SA considering IMF COVID-19 support without structural adjustment conditions

Tito Mboweni. Image credit: Twitter/South African Government

Finance Minister Tito Mboweni says South Africa is “talking” to the International Monetary Fund (IMF) for possible COVID-19 financial support, but such support should be without structural adjustment conditions.

Mboweni was speaking during a virtual media briefing on the government’s responses to the economic impact of the pandemic on Tuesday.

He said, “The IMF has released a basic Q&A on the kinds of facilities which are available at IMF. We are not looking for budget support; we would be looking for the COVID-19 specific packages that we can access, and we are talking to them about that.”

‘We know what to do’

Mboweni added, “We are looking at programmes which would not be accompanied by any structural adjustment programme.

“We know what to do; we know what our structural reform programme is. We will not be looking into that at all.”

Earlier this month, the African National Congress (ANC), SA Communist Party (SACP) and labour federation COSATU alliance secretariat expressed its opposition to suggestions of approaching the IMF.

It said, “The suggestion is rejected. Instead, the secretariat reaffirms the need to safeguard South Africa’s democratic national sovereignty, the fundamental right to self-determination, our independence – which are non-negotiable even in the midst of a crisis.”

‘Government exploring all funding avenues’

However, Mboweni reiterated on Tuesday that the government is “exploring all funding avenues” to finance COVID-19 response measures.

“The funding avenues will not be limited locally, but will include exploring all global partners and international finance institutions. Funding transactions will be announced officially once concluded,” he said.

He said in addition to the IMF, these institutions include the World Bank, BRICS’ New Development Bank (NDB), and the African Development Bank (ADB).

Business Day report last week said National Treasury will take up a $1 billion loan from the NDB to help fight the COVID-19 pandemic.

Mboweni said the government’s economic cluster will announce measures to grow the economy beyond the immediate crisis on Wednesday.

“In the absence of urgent structural reforms, the considerable fiscal actions to mitigate the current crisis may leave the fiscus on at the edge of a cliff,” the Minister said.

The SA Reserve Bank (SARB) forecast earlier on Tuesday that South Africa’s GDP would contract by 6.1% in 2020. However, it expected GDP to rebound rapidly, growing by 2.1% in 2021 and 2.7% in 2022.

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