COSATU condemns Treasury's $2bn donation to IMF

Federation asks whether the ANC NEC was consulted over the decision

COSATU condemns gift to IMF

The Congress of South African Trade Unions strongly condemns the Treasury's donation of $2bn (R16.60bn) to the International Monetary Fund (IMF).

The Minister of Finance made the announcement at the Group of 20 Summit in Los Cabos, Mexico, and it seems to be an attempt to show international institutions and big powers that South Africa is one of the ‘good boys'. Treasury says the money will go into the IMF's $430bn ‘firewall fund' which will be used to assist countries distressed by the current global economic conditions, made worse by the deterioration of economies in the euro zone.

The reality is however that South Africa is one of the most ‘distressed' economies in the world, with massive levels of unemployment, poverty and inequality, far above the levels in any other G20 nation, and should therefore be a beneficiary rather than a contributor to such a fund.

This decision flows from the false assumption agreed to in 1993 that South Africa is a ‘developed' country, and fiscal and monetary policy has been based on this assumption ever since. This has led to the opening up of the economy to international big business, the flight of capital overseas, the removal of tariffs at an even faster rate than the World Trade Organisation wanted, and very high interest rates.

The result has been that the already high levels of unemployment, poverty and inequality have become even worse, with massive job losses, especially in the key manufacturing sectors.

Other developing countries, notably in Latin America, have been abandoning such neoliberal economic policies, but our government is stubbornly clinging to them, despite the fact that they are diametrically contrary to the government's developmental policies such as the Industrial Policy Action Plan and at least parts of the New Growth Path.

COSATU wants to know which ANC Conference resolutions give them a mandate for such a contribution to the IMF. Were the Alliance partners, or even the ANC NEC consulted over the decision?

How does this decision square with the repeated Treasury assurances that the government has absolutely no money to meet the public-sector wage claim or to pay off Sanral's debts?

How will communities with no sanitation, running water, electricity or tarred roads be expected to understand that an amount of money that could have built more than 30 000 RDP houses should be donated to a Fund set up to protect big business?

The federation totally agrees with its affiliate SAMWU that "the IMF and World Bank are not neutral institutions! They have been responsible for impoverishing vast numbers of people across the world, and especially in the South. They remain in the forefront of promoting privatisation, which has legitimised corruption, greed and the enrichment of global elites and their multinational companies. They have effectively forced governments to abandon even basic social security measures and to shift the burden of social provision onto the poor."

COSATU calls on the ANC delegates to next week's Policy Conference to endorse the policy in the ANC Discussion Paper on International relations which says that "The United Nations, the World Bank and the International Monetary Fund (IMF) must be reformed... The current global governance regimes remain untransformed and ill-prepared to respond to the systemic challenges that are arising... Therefore, the commitment to reform of the United Nations and the international finance institutions, especially the World Bank and the IMF, is also a matter of necessity."

The decision must be reversed and the $2bn used to alleviate the plight of the poorest South Africans and to invest in the restructuring of our economy.

Statement issued by Patrick Craven, COSATU national spokesperson, June 19 2012

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