IMF insists emergency loan must be used in an inclusive way
The International Monetary Fund (IMF) has assured interim DA leader John Steenhuisen that the SA government has committed to transparency in the use of the $4.3bn (R71.15bn) the multilateral institution has loaned to it.
This was in response to Steenhuisen’s appeal in May to the IMF to censure SA and demand that its loan for Covid-19 relief not be used in a racially discriminatory way.
The tourism relief fund has granted funds to businesses that are BEE compliant, a practice that has triggered a number of legal actions but has so far been endorsed by the courts.
The letter from IMF MD Kristalina Georgieva to Steenhuisen, dated Friday, was considered by the IMF’s executive board on Monday when it also decided to approve SA’s request for the loan under the rapid financing instrument.
The letter noted that the IMF had received requests for emergency financing from more than 100 affected countries to mitigate the social and economic repercussions of the pandemic.
“In this time of crisis in SA and elsewhere, it is more important than ever to ensure that these funds are used in an inclusive way to protect people’s lives and livelihoods and, in particular, those of the most affected and least prepared to weather the crisis.
“All countries receiving IMF emergency financing have committed to transparently report spending, which will enable an assessment of its impact on mitigating the effects of the crisis.”
The IMF said that in the case of SA, “the government announces spending details in the context of its budget reviews, and reports procurement on its dedicated publication portal”.
“The government will adhere to such practices in the context of the IMF emergency financing.
“In fact, the authorities have committed to transparently plan, use, monitor, and report all Covid-19-related spending to ensure it reaches its targeted objectives.
“The execution of this spending will be published and audited.
“In line with the government’s policy and best practice, the related procurement contracts and allocation will be also published.”
The approach to the IMF has been fraught with tension as the ANC and its alliance partners have been insistent that SA should not agree to any onerous conditions that they said would compromise its sovereignty.
Such conditionality usually comes with programmes for countries that have balance of payment problems and are meant to ensure they overcome their problems and earn enough to be able to repay IMF loans.
The rapid financing instrument that SA agreed to does not have such structural adjustment conditions.
The commitments that the government has made are in line with policies outlined in finance minister Tito Mboweni’s supplementary budget in June.
These include reining in the budget deficit and containing growth in debt as a percentage of GDP. — BusinessLIVE
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