The SA Communist Party (SACP) says Finance Minister Tito Mboweni does not have “the express permission” to borrow funds from International Monetary Fund (IMF) and other finance institutions.
SACP First Deputy General Secretary, Solly Mapaila, made the assertion during an interview with eNCA‘s Xoli Mngambi on Thursday.
During a press briefing after presenting the supplementary budget to Parliament on Wednesday, Mboweni said the leadership of the African National Congress (ANC) supported his talks with the IMF.
“The truth of the matter is that the ANC leadership supports this, that we approach the IMF, the World Bank and the African Development Bank,” he said.
Pension and retirement funds
However, in response to Mngambi’s question as to whether Mboweni had the express permission of the ANC alliance or not, Mapaila said National Treasury should only borrow from multilateral institutions “as a last resort.”
He explained, “He doesn’t have the express permission. What we have said to the [National] Treasury is that [borrow] as a last resort. Our main focus was that let’s use existing finance mechanisms in the country.
“We’ve got pension and retirement funds in the region of R12 trillion in this country. Just a fraction of that will give you more than what they are going to borrow [from] the IMF and the World Bank.”
Mapaila said the government should stop its “obsession” of putting it on record that South Africa has borrowed from the IMF and the World Bank.
“We don’t have to go to the IMF when we also have our own Reserve Bank here. Our view is that the Reserve bank must be able to play a role, including buying some of the government [bonds]. We don’t have to go to the private market when we are a sovereign country that is able to produce sovereign currency,” he added.
In his budget speech, Mboweni said the government intends to borrow about US$7 billion from international finance institutions “to support the pandemic response.” Approximately $4.2 billion (around R72 billion) of this is sought from the IMF.
Earlier this week, the government secured a $1 billion (around R17 billion) emergency loan from the New Development Bank (NDB), an institution established by the Brazil, Russia, India, China and South Africa (BRICS) formation.
The ANC alliance, which includes SACP and labour federation COSATU, has consistently raised concerns of South Africa losing its “national democratic sovereignty” through conditions attached to these loans.
Mboweni however denied this would happen. “The critical issue is that as we enter into those borrowing arrangements, nothing is done that undermines national sovereignty. I don’t know why people think that by definition we’re so careless that we would do anything that undermines national sovereignty,” he said.
To watch Mapaila’s interview on YouTube, click here.