The ANC and its alliance partners, the SACP and COSATU, poured water on Finance Minister Tito Mboweni’s suggestion on Monday, that South Africa might approach the International Monetary Fund (IMF) and World Bank for financial assistance to fight Covid-19.
The three organisations, in a a letter written to President Cyril Ramaphosa and issued by ANC secretary-general Ace Magashule, SACP’s first deputy general secretary and Cosatu’s general secretary Bheki Ntshalintshali said Mboweni’s suggestion was a non-starter and they they were “very concerned” by his utterances.
“The suggestion is rejected. Instead, the Secretariat reaffirms the need to safeguard South Africa’s democratic national sovereignty, the fundamental right to self-determination, our independence – which are non-negotiable, even in the midst of a crisis,” said the Alliance Secretariat.
“Pronouncements that will subordinate our sovereignty to the dictates of the IMF and the like also serve to underscore the importance of a coherent and disciplined approach to communications during these difficult times when unity amongst social partners especially the motive forces of the national democratic revolution is of paramount importance.”
The IMF policy choices for developing countries, known as a structural adjustment programmed are widely detested.
The reason why critics of the IMF loans insist on austerity measures include; cutting government borrowing and spending, lowering taxes and import tariffs and raising interest rates.
The ANC, SACP and COSATU suggested that government should rather approach the New Development Bank, established by BRICS, for assistance. South Africa, Brazil, Russia and China are members of BRICS bloc of countries that view the New Development Bank as an alternative multilateral development finance institution.
South Africa is part of the BRICS bloc which is grooming a new and perhaps alternative multilateral development finance institution.
Some groupings in the ANC, SACP and COSATU have had a strained ideological relationship with Mboweni since he was appointed the Finance Minister in 2018.
Investment bank, PNB Paribas, and the Institute of International Finance last week said the impact of COVID-19 on South Africa’s economy and the depleted public purse will force government to approach multilateral finance institutions for assistance.
South Africa’s economy is currently in a technical recession with the latest data from the South African Reserve Bank indicating that COVID-19 will see the economy plunge by as much as 4% this year.
