South Africa could approach World Bank for funding ‘if needs be’ – Mboweni

Image credit: Twitter/South African Government

South Africa may approach the World Bank for more COVID-19 funding if needs be, Finance Minister Tito Mboweni said on Wednesday.

Mboweni used the Appropriations Adjustment Bill debate in Parliament to provide clarity on the R70 billion ($4.28 billion) International Monetary Fund (IMF) loan to South Africa that was approved on Monday.

IMF loan in context

He said the government regularly borrows from domestic and international bond markets to bridge gaps in its budget. He cited last year’s $5 billion bond issued in the international market as well as weekly bonds in the domestic market, “sometimes of up to R20 billion,” as examples.

These bonds are issued at much higher interest rates compared to the IMF loan, which has been approved at 1.1 percent, Mboweni said.

“The R70 billion loan from the IMF pales into insignificance compared to these weekly borrowings that we do and the international bond issues, if we are to do any,” he added.

The Minister stressed that the IMF, $1 billion New Development Bank and $288 million African Development Bank loans are specific instruments to help fund South Africa’s COVID-19 response. “We think that if needs be, the World Bank could also provide some additional loans,” he said.

Centralised PPE procurement

There have been widespread reports of corruption linked to procurement of COVID-19 personal protective equipment (PPE). The Special Investigative Unit is reportedly investigating such tenders in Gauteng, Eastern Cape and KwaZulu-Natal.

Reacting to these reports, Mboweni said the “feeding frenzy” narrative that portrays every tender or contract as equivalent to corruption “is incorrect.”

“I have held discussions with the Director-General of National Treasury and his [Executive Council] to see how further we can tighten the procedures in this regard and he’s working on it.

“One of the things we are thinking about is how to centrally purchase some of the equipment that’s required, given the capacity issues between ourselves and the national Department of Health,” Mboweni explained.

The Minister also dismissed speculation that the government’s R500 billion COVID-19 economic and social relief package has “disappeared.”

“Nothing could be further from the truth. That is the most amazing urban legend. How could R500 billion disappear? There’s nothing of the sort,” he said.

He added that the package consists of several elements, including a R200 billion loan guarantee scheme, which has only been partially disbursed, and budget reprioritisations.

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