JOHANNESBURG – The Institute of International Finance said South Africa should seek funding from the International Monetary Fund given the country’s high debt levels, large capital outflows and a potentially deep recession triggered by the rapidly spreading coronavirus pandemic.
The institute said that it expected South Africa’s economy to contract by 2.5% in 2020 but said that waning demand, travel restrictions and pandemic-related closures could lead to a deeper recession.
It called South Africa’s economic situation “increasingly untenable.”
The recommendation is not likely to be well received in South Africa, where Finance Minister Tito Mboweni said on Sunday the country would only consider approaching the IMF as a last resort to help fight the virus.
The EFF has rejected what it calls the finance minister’s ‘flirtations’ with the IMF and World Bank.
The red berets said that taking on outside funding would worsen the country’s already dire socio-economic problems.
Spokesperson Delisile Ngwenya: “In addition to flirtations with the IMF, Tito Mbwoweni’s austerity budgeting and so-called structural reforms will only weaken the capacity of the state to lead a developmental trajectory that should never necessarily develop South Africa’s productive economic sectors.”
South Africa is currently under lockdown with people restricted to their homes and most businesses closed.
The country has reported more than 1,300 cases of coronavirus and three deaths.