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The IMF doesn’t play around

The lender noted SA’s commitment to ‘transparently monitor and report’ Covid-19 spend soon after Ramaphosa said he’ll act on corruption.
Finance Minister Tito Mboweni has admitted negotiations with the IMF were tough. Image: GCIS

It’s the tail end of the International Monetary Fund (IMF) statement saying it will grant South Africa a $4.3 billion (R70 billion) loan to help tackle the Covid-19 pandemic that hints at why the negotiation had been so protracted.

When the lockdown commenced on March 21 it was clear that some kind of bailout would be needed, as the coronavirus crisis had pushed the government’s fiscal position from bad to worse. GDP fell 2% for the first quarter and tax revenue is expected to fall by R304 billion to R1 099 billion for the current financial year. This means the deficit is now projected to balloon from 2.6% to 9.7% for the 2020/21 period.

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Although the lender of last resort has been talking with Treasury for a while, Finance Minister Tito Mboweni made it clear in a media briefing after his supplementary budget speech on June 24 that the negotiations have been anything but easy.

He had already secured $1 billion (R16.5 billion) in funding from the Brics-backed New Development Bank, but said the negotiation with the IMF had been “protracted”, “tough” and “difficult”.

Issues with conditions

At the time, Mboweni didn’t say exactly what the holdup was, only that there were issues around the conditions of the facility.

The IMF’s fees at 1.1% over 3.25 to five years are not onerous, but the lender does tend to get in the weeds when it comes to governance matters around how the money is used. In December 2018, for example, it got the Angolan government to agree to strengthen its public finance management legislation, as one of the conditions for it getting access to a $1.24 billion facility.

To put it bluntly, the IMF got a country to get its legislator to agree to change laws in order for it to access this funding.

This is why it’s telling that the IMF’s first deputy MD and acting chair Geoffrey Okamoto noted in the statement that: “The authorities’ [the South African government’s] commitment to transparently monitor and report all use of emergency funds is crucial to ensuring Covid-19 related spending reaches the targeted objectives.”

In other words, it wanted some sort of guarantee that the funding would not fall prey to corruption.

Last Thursday (July 23), Okamoto and the IMF received this when President Cyril Ramaphosa in a televised address committed to using the state’s security and prosecution resources to do just that.

Read: No room for complacency in implementing reforms: Treasury

Anti-corruption squad

Among other measures, Ramaphosa announced the creation of the “collaborative and coordinating centre” that will investigate Covid-related corruption.

It brings together the Financial Intelligence Centre, the Independent Police Investigative Directorate, the National Prosecuting Authority, the Hawks, Crime Intelligence and the SAPS Detective Service, the South African Revenue Service, the Special Investigating Unit (SIU) and the State Security Agency.

Ramaphosa said 36 cases are already being investigated.

To further speed up investigations, Ramaphosa also signed a proclamation authorising the SIU “to investigate any unlawful or improper conduct in the procurement of any goods, works and services during or related to the national state of disaster in any state institution”.

“This empowers the SIU to probe any allegations relating to the misuse of Covid-19 funds across all spheres of the state,” he said.

Ramaphosa did not have to wait long to prove that he was taking alleged Covid-19-related corruption seriously.

Earlier this week, his spokesperson Khusela Diko requested The Presidency to “allow her to take leave of absence from all official roles in government, pending investigations on recent allegations involving her and her husband [AmaBhaca King Madzikane II Thandisizwe Diko] in tender irregularities in the Gauteng Department of Health”.

Although the issues around Diko still have to play out and it is yet to be seen whether the formation of the collaborative and coordinating centre will result in any prosecutions, it’s already clear that in accepting the IMF lifeline, SA is beholden to the lender.

The IMF effectively told SA that if it wanted R70 billion it would have to jump this high to get it, and the government obliged by giving its best hop.

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COMMENTS   24

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‘Ramaphosa said he’ll act on corruption’ – yeah right.Bugs bunny and liewe heksie are also still alive.

And then his family and secretsty get implicated in corruption…again

Then he has the audacity to use the words “New Social Compact”

Will you make and agreement with him???????

It is supposed to be an agreement of “MUTUAL ” benefit.

Do you see that happening??? What benefit will you get???

See him for what he is.

Apparently no politician has been jailed for corruption, I suspect no assets seized either. Unbelievable???

I have a friend who was in the trades union movement in the 80’s and 90’s. He always guffaws when people talk about CR doing this and doing that. He says his experience was CR never, ever did anything. Never. Wake up South Africa.

Easy. Make every single Govt (local, Provincial and National) tender absolutely transparent and available on the internet.
Make transparency law.

As per the popular TV series, apartheid was brought down by the anc struggle lobbying international politics, sport, Olympics, rugby etc etc…..The outcome thereof we all know .

AS history repeats itself, i see the suburbs of Moneyweb/civil society lobbying the IMF for a more transparent/honest/deceitful gubberment.

I have a flight ticket in hand that is tax deductible ,where do i visit the IMF with my petition?

The ANC mafia are untouchable to South Africans by design. They must first be neutered so that their design can be changed in favor of the people and rule of law. By driving SA over the financial cliff the mafia gangsters reveal a weak spot whereby their begging bowl can only be filled by creditors that attach conditions which enables the hopefully temporary usurping of their untouchable status and the enabling of the needed changes. The question is where do you find any right-minded entity in this day and age?

Any entity that lends the ANC money is either stupid or has an ulterior motive. In this case, when the IMF loan is defaulted upon, they will be all over SA looking for resouces to expropriate. It is a deliberate plan. Systematic looting of SA enabled by our virtuous leaders.

The lenders Must have an ulterior motive, im sure/hope the whole world knows whats going on in communist South Africa.

Agreed. Lending to these kelptomanaics is not a business decision but a political one. The IMF will eat these guys alive now

“…will be all over SA looking for resources…”

That is the role of CHINA, not the IMF.

That’s why I say, one day, the cheapest way to ’emigrate’ to China, is to have property in places like Walvis Bay or Coega, where the Chinese made infrastructure investment.

Beijing knows they actually build it “for themselves” for later commercial & military use. One morning you wake up, realising you are now inside Chinese sovereign territory all of a sudden 😉

well if you open the tobacco industry , or never closed it, you would not have needed IMF funding

Indeed, the IMF does not play around.
But the ANC does play around (gamble is the right word) with the South African Economy.

Tito, You did however look like a beggar at the IMFs doorstep.

I wonder if these beggars told the IMF that they are actually going to use this money to ” save ” the SAA

As the saying goes “Put one’s money where one’s mouth is”

However, in this case it is not one’s own money but IMF money, and a mouth covered with a mask.

History always repeat itself, and it is only fools that expect different results.

BUT.. Hopefully this time is different, because hope always dies last!

The IMF is not stupid…they have seen that the Zondo commission is a farce and not one ANC cadre has been convicted and the cavalier manner that the ANC spends the tax payers money. Ramaphosa is again bluffing with his anti-corruption speeches. Why have negotiations with the IMF been difficult? I tell you why… they don’t trust the SA government. Watch this space …not a single high ranking politicians will be convicted. The ANC cadre sticks together like snot.

It’s one thing to get a loan, its another thing entirely to repay it. What is the plan to repay it?
If the government are hoping to magically increase GDP, the government is in for a shock. Their current modus operandi has been to get the overburdened middle-class to shoulder the burden. I strongly suspect, with a raft of proposed taxes, the NHI, Eskom and SAA bailouts, not to mention the difficulty to run a business in the country, the middle-class is not far away from a full-blown tax revolt. Mr Mboweni will have a whole different problem on his hands.

Well, if everything backfires we can print money. It’s working well for the USA, and I mean, look how well Zimbabwe turned out…

It would be cool if the IMF found irregularities and did an investigation into it… And found more irregularities and blow the whole corruption thing open… However, I’d prefer just living in a country where equality rains and we can trust our leaders (both political and business).

“….and the government obliged by giving its best hop”.

Army Corporal:

“Troep, as ek vir jou sê “spring!” dan vra jy “HOE HOOG korporaal?!”
Verstaan jy my?!”

“JA, Korporaal!”

😉

“Saying” and “doing” are two different things….”Actions speak louder than words”
So far we’ve had a lot of words from CR and the ANC and seen very little action.
The time has come for action Cyril.
We wait to see……

President Ramaphosa promised feedback on Covid corruption in 6 weeks – let us see what results he will announce.

Im curious, has anyone considered that this is perhaps a calculated political move made by Cyril, Tito and Co.? We all know of the 2 factions within the ANC i.e. Zuma and his cronies and Cyril, Tito, Trevor, etc..

Many people lambast the president for not taking decisive action however it can be said that whilst he would like to, he cannot due to not have overwhelming support. By accepting the loan from the IMF it holds the government accountable on the highest level, it also allows him to put transparent structures and bodies in place that will assist in prosecuting corrupt officials which he would not have been able to do under normal circumstances due to internal pressure within the ANC.

Disclaimer: I do not and have never supported the ANC

End of comments.

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