IMF (The International Monetary Fund) approved a $4.3 billion (R70 billion) in support of the impact COVID-19 pandemic has caused to the South African economy. It has been decided by Treasury and IMF management after having discussed the matter intensively for a couple of months.
The funds are a part of the R95 billion that has been sought from other companies to support areas affected by the impact of the COVID-19 pandemic including job creation, insurance cover, and businesses. According to multiple reports, the loans provided are accounted for in the government’s economic R500 billion stimulus package.
The New Development Bank agreed to loans of $1 billion, and the African Development Bank has agreed to loans of R5 billion.
“The Executive Board of the International Monetary Fund (IMF) today approved South Africa’s request for emergency financial assistance of SDR 3,051.2 million (US$ 4,286.5 million or 100 percent of quota) under the Rapid Financing Instrument (RFI) to meet the urgent balance of payment (BOP) needs stemming from the outbreak of the COVID-19 pandemic.” IMF writes in a statement.
Treasury in a statement indicated that the ‘additional IMF funding is a low-interest loan that contributes to the government’s fiscal relief package while respecting South Africa’s decisions on how best to provide relief to the economy and those worst affected by the current crisis.’
The relief package as indicated by Treasury will:
- Support health and frontline services
- Protect the most vulnerable
- Drive job creation
- Unlock economic growth through reforms
- Stabilize public debt
The current Minister of Finance, Tito Titus Mboweni said “Government’s Covid-19 economic support package directs R500 billion straight at the problem. This is one of the largest economic response packages in the developing world. The South African Reserve Bank has reduced interest rates and made it easier for banks to lend money, and supported liquidity in the domestic bond market. “
“Government spending and tax proposals, as well as the loan guarantee scheme and wage protection measures, are providing protection to workers and the poor while assisting firms to stay afloat during these tough economic times. Going forward, our fiscal measures will build on our policy strengths and limit the existing economic vulnerabilities which have been exacerbated by the Covid-19 pandemic.” Mboweni added.
South African COVID-19 Information Portal
iBusiness on COVID-19