Government, said Mbete, assured the IMF of 'certain policy steps it was likely to take', despite the loan being approved without conditions.
Finance Minister Tito Mboweni briefing media on the announced economic support package | Image: Twitter/ @treasuryRSA
Conceding that the Covid-19 outbreak had led to “a sharp economic contraction and significant financing needs in SA”, the IMF extended the funds under the Rapid Financing Instrument to support the government’s efforts to address the severe health and economic impact of the coronavirus pandemic. “All SA had to do was to show the IMF that the country was in a crisis because of Covid-19 impacting severely on the tax shortfalls and filling the gap from taxes we have not been able to collect. This loan is part of an agreement that all member states have reached, with SA being a regular contributing member to the IMF.
These, she said, included trimming public service spending and the privatisation of poorly performing state-owned enterprises. While agreeing with Mbete, University of Stellenbosch Business School development economist Dr Nthabiseng Moleko was concerned “because debt sustainability has been declared … as an issue, with high debt servicing costs taking more of our fiscus”.
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