Tito Mboweni's expression of interest in the Covid-19 relief funding being offered by the World Bank and the IMF has predictably touched off a furious flurry of responses from the Left whose attitude to the Bretton Woods institutions is rather similar to that of Aids denialists to HIV. Mention of these institutions triggers fevered denunciations and a whole slew of more or less mad economic policy proposals and wild accusations.
Solly Mapaila, the SACP's No.2, says, for example, that South Africa should not deal with either the World Bank or IMF because the conditions of their loans “are always secret”. This is completely untrue, as a visit to their websites will confirm. An IMF bailout works via a letter of intent which sets forth the reform programme on which the loan is conditional and this is usually further amplified by a memorandum of economic and financial policies.
Mapaila insists that South Africa has no need of IMF help and can depend on its own domestic resources. For example, private company pension funds. Would he raid them? No, “it's not raiding. It's utilising them to fight the economic crisis”. This is a frankly illegal proposal: neither Mapaila nor anyone else has any right to lay their hands on these private pensions. He argues, though, that the workers who thus lose their pensions would be in for a rough time anyway, due to the crisis. So, apparently, it's OK to rob them.
Pali Lehohla, the former Statistician-General, argues the same way. Resort to the IMF and World Bank must be resisted because “we still have a lot of resources in the country such as the PIC, we have corporates sitting on trillions also about R7 trillion (sic)”. Again, the Public Investment Corporation can apparently be raided at will as can any money that private companies have in their balance sheets. It is pure law of the jungle stuff. It is also worth remembering that for years now the government has been borrowing abroad in order to pay public service salaries. If it suddenly had to rely only on domestic resources there would have to be swingeing pay and job cuts.
Another fevered voice is that of Patrick Bond who wants the SA Reserve bank to declare “force majeur” (he means “force majeure”) and immediately stop all international payments of interest, dividends or profits. He also urges the immediate cessation of all public debt repayments. Again, there is no room here for any legal considerations or contracts, nor for the immediate legal remedies aggrieved parties could enforce via investment protection pacts. There is no thought, either, of the simple fact that the minute South Africa did such a thing it would be completely locked out of all the world's credit markets, would be unable to sell another company or government bond, might well be unable to finance either imports or exports and would become an investment pariah.
Again, the recommendation is for the law of the jungle. We should just tear up all agreements, disregard all rules and do whatever we feel like. There is no consideration of the inevitable reprisals such policies would provoke. For example, if we froze all payments due to American investors there is no doubt at all that we would lose the AGOA agreement and that our car industry would collapse. South Africa is a small player and it would be the height of folly to thus pick fights with the heavy hitters.