'SA won't accept loans compromising sovereignty': Paul Mashatile
ANC treasurer-general Paul Mashatile has assured South Africans that the party would ensure that any loan from international financial institutions such as the World Bank and IMF will not compromise the country's national sovereignty.
Mashatile was addressing an online dialogue of the Progressive Business Forum on Thursday — after an announcement by President Cyril Ramaphosa on Tuesday that SA would approach international financial service providers for help during the Covid-19 pandemic.
Mashatile said the ANC was confident that finance minister Tito Mboweni and his team at the National Treasury would secure a “better deal” from these institutions.
He lauded the R500bn social-economic stimulus package announced by Ramaphosa, most of which will be made up of loans from the IMF, World Bank, the Brics New Development Bank and African Development Bank.
“To fund this massive social and economic stimulus about R130bn will be reprioritised within the current budget, the rest of the funds will be raised from local sources such as the UIF and international finance institutions, including the World Bank, the IMF, the New Development Bank and the African Development Bank,” said Mashatile.
“We will ensure that the conditions placed on the loan funding raised do not compromise our national sovereignty.”
Mashatile added that the governing party was cognisant that conditions placed on loans by the likes of IMF may undermine the country's developmental agenda.
To this end, the ANC was particularly opposed to loan conditions such as a request for structural adjustments.
The party was hopeful that SA would get a better deal.
Said Mashatile: “Our approach as the ANC is that our team in government will negotiate the loan conditions because in any bank where you get loans, there will be conditions.
“Our team will look at whether those conditions are not heartless to our situation, particularly one of the things we are trying to avoid is structural adjustments which can basically compromise our developmental agenda.
“Our Treasury team is busy negotiating so we will hear from Tito [Mboweni] what the conditions are but we felt that we should not exclude these institutions because we know that historically there have been problems,” he added.
Mashatile described the coronavirus pandemic as a “crisis like no other”.
The pandemic was going to damage the economic prospects of many, he said, but government would minimise the damage.
“In our country SA, it is estimated that the nationwide lockdown in response to Covid-19 is costing the economy almost R13bn per day.
“The Reserve Bank expects GDP to contract by 6.1% in 2020 with the potential loss of 370,000 jobs.
“Our fiscal deficit is expected to total 12% of GDP while the dept to GDP ratio is expected to climb to about 81% by 2021 putting a further strain on our public finances and raising our cost of borrowing.”
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