No room for complacency in implementing reforms: Treasury
The South African government has no choice but to stabilise debt and implement the identified growth reforms in order to avoid the demise of the country, National Treasury’s Director-General Dondo Mogajane said.
“Now it has dawned on all of us, Covid-19 including the downgrade by Moody’s has proven that if we are not going to be serious in ensuring that we implement, we will be in trouble,” he told Moneyweb following the International Monetary Fund (IMF) agreeing to lend the country $4.3 billion (R70.4 billion) to assist with government’s response to the pandemic fallout.
Read: IMF approves $4.3bn loan for SA to address Covid-19 challenges
The Rapid Finance Instrument (RFI) forms part of the government’s plans to raise R95 billion to largely find the health and social aspects of the government’s R500 billion support package. It comes after The New Development Bank and the African Development Bank approved South Africa’s applications for loans of $1 billion dollars and $288 billion dollars respectively.
Self-imposed conditions
The RFI is a vehicle that the IMF uses to extend funding to countries which have been affected by a disaster or emergency situation and require funding quickly for the balance of payment needs. These loans are not subject to the traditional conditions set by the IMF, such as deep structural reforms.
The stipulations that do apply are self-imposed and contained in a Letter of Intent sent to the IMF, written jointly by the finance minister and the reserve bank governor, in which a country outlines detailed economic reforms it plans to implement as part of its motivation to have its application approved.
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