The International Monetary Fund (IMF) executive board has approved South Africa’s request for a US$4.3 billion (R70 billion) loan to overcome the COVID-19 pandemic.
The request for emergency financial support under the Rapid Financing Instrument (RFI) will help the country to mitigate the adverse social and economic impact of the pandemic.
In a statement issued on Monday, National Treasury said the additional IMF funding is a low-interest loan that contributes to government’s fiscal relief package while respecting South Africa’s decisions on how best to provide relief to the economy and those worst affected by the current crisis.
“It will also pave the way for the government to provide the necessary financial relief required to forge a new economy and mitigate further harm to the economy,” Treasury said.
South Africa, like many countries across the globe, has not been spared from the devastating impact of the deadly virus that has ravaged economies.
The COVID-19 crisis has forced the government to come up with fiscal and monetary measures that respond to the struggling economy and contain its negative effects on society.
In his special adjustments budget in Parliament last month, Minister of Finance Tito Mboweni, outlined the government’s key interventions to curb the pandemic.
These include support for health and frontline services, protection of the most vulnerable, supporting job creation efforts, unlocking economic growth through reforms and stabilising public debt.
“Government’s COVID-19 economic support package directs R500 billion straight at the problem. This is one of the largest economic response packages in the developing world.
“The South African Reserve Bank has reduced interest rates and made it easier for banks to lend money, and supported liquidity in the domestic bond market. Government spending and tax proposals, as well as the loan guarantee scheme and wage protection measures, are providing protection to workers and the poor while assisting to stay afloat during these tough economic times,” said Mboweni.
Going forward, government’s fiscal measures will build on policy strengths and limit the existing economic vulnerabilities that have been exacerbated by the Coronavirus pandemic, Mboweni said.
Meanwhile, both the New Development Bank and the African Development Bank have agreed to loans of $1 billion (R17.3 billion) and R5 billion respectively.