Fears over IMF loan conditions

The R70.7 billion loan to South Africa by the International Monetary Fund (IMF) has sent tongues wagging as it is feared the fund will impose structural adjustment programmes that will force the country to abandon its leftist policies on land expropriation and the nationalisation of the Reserve Bank.

The IMF would like to see “growth-enhancing structural reforms” implemented by Pretoria, something that some saw not as stringent as the structural adjustment programme. An expert on international relations, Dr Sithembile Mbete, did not think it would go that far, but said the IMF could request SA to abandon land reform in exchange for renewed private investment.

Mbete, from the University of Pretoria, said the loan will see the return of growth, employment and redistribution (Gear) via the back door.

“I think the greater concern is about its intention to usher in Gear part two by imposing austerity measures on the country without getting political or public buy-in,” Mbete said.

“The government will face the same kind of political resistance that Gear faced and won’t be able to implement the reforms it wants to.”

ANC partners Cosatu and the SA Communist Party (SACP) and even the militant left such as the Economic Freedom Fighters (EFF) and the South African Federation of Trade Unions (Saftu) expressed fears about the IMF loan. At 70%, the IMF loan formed the biggest chunk of money the country received to fight the Covid-19 pandemic.

In addition, R5 billion came from African Development Bank and R16 billion from the New Development Bank. EFF spokesperson Vuyani Pambo described the IMF loan as the “biggest blunder in the history of South Africa”.

The SACP’s Blade Nzimande said it was a mistake to take the loan. Their fears stemmed from the fact that the IMF conditions cast doubt over the land expropriation without compensation initiative and the proposed change to the mandate of the Reserve Bank.

“The biggest opposition to any land reform is from the domestic and international business interests. Perhaps the IMF will put pressure on the government to abandon land reform in exchange for renewed private investment in the economy,” Mbete said.

For more news your way, download The Citizen’s app for iOS and Android.