Criticism over government’s IMF R70 billion loan continues. The South African Federation of Trade Unions (SAFTU) says instead of borrowing from international lenders, government must revise the tax system and implement greater measures to root out corruption.
The International Monetary Fund (IMF) has approved $4.3 billion in emergency financing for South Africa, which is part of $7 billion in planned borrowing from international financial institutions.
The BRICS Bank has also approved a $1 billion-loan and the African Development Bank says it will lend the government R5 billion. The money will assist South Africa mitigate the social and economic impact of the of the COVID-19 pandemic.
Talks with the World Bank are under way.
SAFTU General-Secretary, Zwelinzima Vavi, says by continuously borrowingc v government is risking the country’s sovereignty.
“We should be looking at things like halting the illicit cash outflows that’s been estimated between R10 and R25 billion annually. We’ve asked that the government must stop the bleeding within its procurement policies. The top official in the treasury once told the country that we losing between 35 and 40% of our procurement budget to corruption. We asked the government to review the whole taxation system. The corporates were paying up to 55% in corporate taxes by 1994 and that corporate tax has now been reduced to about 28%. We think that that is ridiculous,” he says.
SAFTU’s sentiments are also shared by the Economic Freedom Fighters and the governing party’s alliance partner, the South African Communist Party.
The Congress of the People raised concern over possible theft of the funds while the Democratic Alliance (DA) called for transparent about the use of COVID-19 Relief Funds and this loan.
For its part, the National Treasury has assured South Africans that the money will be channelled to where it is meant to go.
“The first priority should be to ensure that we address the most vulnerable, which we are doing secondly we are ensuring that the impact of COVID-19 is contained and finally we use the remains of what is left to ensure that we create jobs and opportunities for the most vulnerable in our society, so I’d say those are the critical areas to ensure that we use the money appropriately at this point in time,” Director General at National Treasury Dondo Mogajane has said.
In the video below, Political party leaders react to IMF’s R70 billion loan to SA: