EFF statement on the IMF load to South Africa

28 July 2020

The EFF rejects the decision by the IMF Executive Board to approve South Africa's request for a loan of R70.7 billion. The loan from the IMF is in addition to a loan of R5 billion from the African Development Bank and R16 billion from the New Development Bank. In total, the government has borrowed more than R90 billion, with 77% of the borrowed money coming from the IMF. This is the biggest political blunder in the history of South Africa. Loans from the IMF always come with neoliberal and neo-colonial conditionalities and South Africa will not escape from this reality. Whether immediately or in the long run, the IMF will impose conditionalities which will certainly undermine South Africa's macroeconomic and fiscal policy sovereignty. Once again, the EFF will be proven to be correct in this observation.

It is now evident that the white capitalist establishment is working with their global allies to use their puppet President Ramaphosa to hijack the sovereignty of South Africa.

Ramaphosa is proving to be the biggest danger to South Africa's sovereignty against neo-colonialism. Whilst he is allowing his colleagues and family to loot state resources, he is also sacrificing our country to the highest bidders on the altar of capitalist convenience.

The budget tabled by the Finance Minister in Parliament in June only allocated R43.2 billion additional funds to the budget. R32 billion was allocated to the national government, and RI 1 billion was allocated to the local government. The rest of the funding was provided through reprioritisation process while many programme's budgets were cut. Yet the government borrowed twice the amount of money allocated in the budget.

The EFF warned the government on numerous occasions about the indisputable evidence that the involvement of the IMF and World Bank in different countries has led to massive impoverishment of the majority of the citizens. It is foolish and naive to think that the IMF can give South Africa that has the highest inequality in the world, one of the highest

unemployment rates and an economy that is facing deep depression without conditionalities that will benefit multinational American and European corporations. The IMF statement announcing the approval of the loan is already dictating expected structural reforms.

Government is borrowing money without a believable plan to deal with already uncontrollable debt or economic recovery. It is most concerning that the rush to borrow money from the IMF was considered the first option when there is sufficient money in the domestic capital markets, current account in surplus and reserves. South Africa is not short of money to warrant borrowing money from the IMF.

Mboweni is knowingly misleading the country by suggesting that the loan from the IMF is a low-interest loan. The money from the IMF is dollar-denominated, and as such, it will have to be paid back in the dollar. In the absence of sound and practical economic recovery strategy, the Rand is unlikely to stabilise. In January, one U.S dollar was equal to RI 3,99; today, one U.S dollar is equal to R16.65. In Rand terms, the money borrowed by South Africa would have more than doubled at the time of repayment. It is not true that the loan is cheap.

The IMF funded the apartheid government while the crime against humanity was unfolding without any shame and remain unrepentant like most racist white South Africans who continue to treat our people like animals while exploiting their labour. Mboweni is busy taking instruction from Goldman Sachs and continuing with the tradition of the ruling party since 1994 to dance to the tune of white monopoly capital. Those who believe that government is run from Pretoria are in slumber sleep in the yoke Washington. There are practical proposals, including borrowing money from the Reserve Bank and domestic markets that should have been prioritised. With the loan from IMF, South Africa has now confirmed itself as a puppet government of the nonsensical Washington consensus and Goldman Sachs.

Issued by Vuyani Pambo, National Spokesperson, EFF, 28 July 2020