SA could approach IMF, World Bank
SA will consider approaching international financial institutions such as the IMF, the World Bank and the New Development Bank to help fund health interventions against the coronavirus crisis, finance minister Tito Mboweni said.
His comments, at a briefing on Sunday, followed discussions held on Friday between the IMF and the International Monetary and Financial Committee (IMFC), which advises the IMF board of governors on various issues, including on how to deal with shocks to the financial system. The body is chaired by Reserve Bank governor Lesetja Kganyago.
The entities committed to support countries, particularly low-income and developing economies, battling with both the health and economic consequences of the pandemic.
Alongside World Bank support measures to help health authorities to respond to the crisis, the IMF has put in place a number of facilities to help developing nations hit by a combination of a health crisis and a sudden reversal of capital flows.
Though it was not necessary at this stage, Mboweni said he is not ruling out approaching these agencies for further support, under these kinds of facilities.
“If I approach the IMF, the World Bank, the New Development Bank, it will be if we run
out of finance for health interventions,” Mboweni said. “But I am very pleased that IMFC conversation has encouraged the IMF board to find ways and means to support countries, and if needs be I will approach them for that kind of support.”
As SA is a member of these institutions, it will also be in the queue for assistance, he added.
“As of today I do not need IMF or World Bank assistance, but I am keeping them in my back pocket just in case I need them,” he said.
The media briefing followed the decision by Moody’s Investors Service to downgrade SA to sub-investment grade late on Friday night. Moody’s reasons were SA’s deteriorating fiscal position and weak growth.
Mboweni’s willingness to consider options such as the IMF could be well received.
Prior to the downgrade, Stanlib chief economist Kevin Lings told Business Day that approaching the IMF under its Covid-19 initiatives could give investors greater comfort about SA’s ability to manage the crisis. This funding is not the same as structural adjustment programmes run by the IMF and would not come with the same “conditionalities” imposed under these packages he said.