We’ll ensure IMF, World Bank loans don’t compromise SA’s sovereignty – Mashatile

Paul Mashatile. Image credit: Facebook/MyANC

African National Congress (ANC) Treasurer General Paul Mashatile has said the government will ensure that loans from international finance institutions do not compromise South Africa’s national sovereignty.

Mashatile made the assurance during an online dialogue organised by the Progressive Business Forum on Thursday.

“We will ensure that the conditions placed on the loan funding raised do not compromise our national sovereignty,” he said.

Opposition in ANC alliance secretariat

Earlier this month, the ANC’s alliance secretariat, which includes the SA Communist Party (SACP) and labour federation COSATU, expressed opposition to approaching the International Monetary Fund (IMF) and World Bank for funding.

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.”

However, a meeting of the ANC’s National Working Committee (NWC) on Monday mandated the government to do “whatever it takes” to rescue the economy.

President Cyril Ramaphosa subsequently announced a R500-billion COVID-19 economic and social relief package which would be funded in part by loans from the IMF, World Bank, BRICS’ New Development Bank, and African Development Bank.

‘No structural adjustments’

Mashatile said, “Our approach as the ANC is that our team in government will negotiate the loan conditions because in any bank where you get loans, there will be conditions.

“Our team will look at whether those conditions are not heartless to our situation, particularly one of the things we are trying to avoid is structural adjustments which can basically compromise our developmental agenda.

“Our Treasury team is busy negotiating, so we will hear from [Finance Minister] Tito [Mboweni] what the conditions are, but we felt that we should not exclude these institutions because we know that historically there have been problems.”

Writing on Twitter on Thursday, Mboweni emphasised that IMF loans to combat the pandemic have “zero interest rates and no conditionalities.”

He added, “After this, there should really be no doubtful questions. This is not the time for division. We should not lose any opportunity. It is a ‘war’ situation. ‘All to the Front!’”

In an interview with CNBC Africa earlier this month, IMF’s Africa Director Abebe Selassie also said, “[South Africa] has now been hit with a crisis not of its own making … and as a result, its economy is being impacted.

“So, the facility that probably would be of most help to South Africa is the rapid disbursing resources that we have. There are no conditionalities associated with this facility, zero interest rates.

“South Africa, as a member of the IMF, is entitled to make use of this zero-interest payment, which I think is way more favourable than alternative financing.”

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