As the government goes in search of US$7 billion in COVID-19 relief, Finance Minister Tito Mboweni said that South Africa’s sovereignty would not be undermined.
The government is either in talks with or plans to approach the International Monetary Fund, the New Development Bank (Brics bank)) as well as the World Bank for urgent funding.
Mboweni said that the money had to be repaid.
It is money set aside by the foreign financial institutions for COVID-19 relief and comes at a relatively low rate of interest.
At the same time, Mboweni has warned that the country faces bankruptcy if it did not act to nail down its debt.
Minister Mboweni wants to put a lid on suggestions that South Africa’s applications for foreign funding will see the country lose its say over its economy and its financial affairs.
Answering questions during a post-budget speech briefing, he had this to say:
“There’s no way in which I would have proceeded to reach this level of conversations with the IMF if the ANC leadership did not support this.
“So the truth of the matter is that the ANC leadership supports this position, that we approach the IMF and the World Bank and the New Development Bank and that the critical issue is, that as we enter into these borrowing arrangements with the IMF, that nothing is done that undermines national sovereignty.”
The borrowing is necessary because South Africa is spending more than it earns. COVID-19 has slashed growth and tax revenue forecasts but also calls for emergency funding to fight the pandemic and to deal with its social and economic fallout.
“I would like to be in a position where I don’t have to borrow anything, the same like any other individual – I would rather not go to the bank for an overdraft.
“But when you have got that hippo mouth as wide open as it is, you have to find a way to close the funding gap.”