South Africa’s finance minister said more than $4 billion was available from the International Monetary Fund and World Bank for the country to help it fight COVID-19, playing down worries that the money would come with onerous conditions.
Africa’s most industrialised economy has approached international financial institutions to contribute to a 500 billion rand ($26.4 billion) rescue package aimed at cushioning the blow from the new coronavirus on businesses and poor households.
The approach comes despite deep suspicion in some governing party circles and within the influential trade union movement because of the conditions the IMF and World Bank might impose.
The minister, Tito Mboweni, said those opposed to the government borrowing from the IMF and World Bank were making “a mountain out of an anthill”. An IMF official told Reuters last week that the emergency funds on offer came with no requirement for a structural adjustment programme.
“The critical thing about the IMF facility that we would approach them for is that it is specific to the crisis. This is not the usual budget support or policy intervention or technical assistance and conditionalities. … I think we need to understand that,” Mboweni said.
“The IMF has indicated themselves that South Africa is entitled to apply for up to $4.2 billion in response to this crisis,” Mboweni told a news conference.
He added that South Africa could negotiate for a facility of “maybe between $55 and $60 million” at the World Bank.
South Africa is also talking to the African Development Bank and New Development Bank of the BRICS countries to try to source funding.
The rest of the money for the rescue package is expected to come from cutting previously planned spending and domestic borrowing.
Separately, National Treasury said in a statement that the 200 billion rand loan guarantee scheme that also forms part of the package would be rolled out over the next few weeks.
The first phase will be for 100 billion rand, with COVID-19 loans available from commercial banks for firms with an annual turnover of less than 300 million rand.