Treasury must provide clarity on how IMF billions will be used
24 August 2021
The International Monetary Fund (IMF) has extended a credit line of R65 billion to South Africa through its Special Drawing Rights (SDR) facility. This is on top of the R70 billion emergency financial assistance extended to South Africa by the IMF last year under its Rapid Financing Instrument.
It is imperative that National Treasury provide clarity on exactly how this credit will be utilised going forward, including how it will impact South Africa’s interest payment obligations to the IMF based on the negative difference between South Africa’s SDR holdings, on which we receive interest, and allocations, on which we pay interest.
Current IMF data indicates that South Africa’s total overdue obligations and projected payments for 2021 amount to 16.2 million SDRs, or R348.28 million, and is projected to increase to 1 547.7 million SDRs, or R33.26 billion, by 2024.
Whilst the current liquidity injection into the economy is welcomed, it is crucial that it is used to fund actual investments instead of current expenditure such as public wages or non-operating expenses such as interest payments.
Issued by Dion George, DA Shadow Deputy Minister of Finance, 24 August 2021