JOHANNESBURG, South Africa
The International
Monetary Fund's executive board has agreed to extend a $4.3 billion (R70
billion) loan to support South Africa's response to the impacts of Covid-19 on
the economy.
The decision comes after months of engagement between Treasury and IMF management, and it is part of R95 billion being sought from multilateral institutions to support job creation, protection and businesses negatively impacted by the Covid-19 pandemic. These loans are accounted for in government's R500 billion stimulus package to support the economy.
So far both the New Development Bank and
the African Development Bank have agreed to loans of $1 billion and R5 billion
respectively.
"The Executive Board of the International
Monetary Fund (IMF) today approved South Africa's request for emergency
financial assistance," the IMF said in a statement issued on Monday
evening.
Geoffrey Okamoto, First Deputy Managing
Director and Chair of the IMF, noted that SA authorities responded
"swiftly" to the crisis. The IMF said that SA had committed to manage
the emergency financial assistance with "full transparency and
accountability".
This IMF loan has been issued through a "rapid financing instrument" and is not subject to stringent conditions such as structural reforms associated with other IMF lending facilities.
Treasury has been working out repayment terms of the loan with the
IMF, Finance Minister Tito Mboweni previously explained at
a press briefing following the tabling of the supplementary budget in June.
"The additional IMF funding is a low
interest loan that contributes to government's fiscal relief package while
respecting South Africa’s decisions on how best to provide relief to the
economy and those worst affected by the current crisis," Treasury said in
a statement.
"The country has been hard hit by the
pandemic, and this required government to come up with fiscal and monetary
measures that would respond to the struggling economy and contain its negative
effects to society."
Commenting broadly on the R500 billion stimulus package, Mboweni said it is "one of the largest economic response packages in the developing world". "Going forward, our fiscal measures will build on our policy strengths and limit the existing economic vulnerabilities which have been exacerbated by the Covid-19 pandemic," he added. - News24
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