The International Monetary Fund (IMF) has agreed to a nearly R70.6bn loan to SA.
In a statement on Monday night, the National Treasury announced that the IMF’s board had approved the government’s request for “emergency financial support” to the tune of $4.3bn (about R70.58bn at the current exchange rates).
The loan would “help the country mitigate the adverse social and economic impact of the Covid-19 pandemic”, it said.
“The additional IMF funding is a low-interest loan that contributes to 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,” read the statement.
“It will also pave the way for government to provide the necessary financial relief required to forge a new economy and mitigate further harm to the economy.
“The country has been hard-hit by the pandemic, and this required government to come up with fiscal and monetary measures that would respond to the struggling economy and contain its negative effects to society.”
Finance minister Tito Mboweni said: “Government’s Covid-19 economic support package directs R500bn 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 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.”
The statement added that the relief package, of which the IMF loan forms part, would support health and front line services, protect the most vulnerable, drive job creation, unlock economic growth through reforms and stabilise public debt, among other things.