Deputy minister defends R70bn IMF loan

THE National Treasury has stuck to its guns on the R70 billion loan from the International Monetary Fund despite sitting on debt-service costs of R200bn a year.

Deputy Minister of Finance David Masondo defended the loan to help fight the spread of Covid-19, saying it was borrowed under good terms.

“This loan, we are paying 1% interest on it, as opposed to going to other markets and paying between 7% and 8%. We know that if the rand loses value, we will pay more. This facility was meant for Covid-19-related activities. We are aware of the risk and the exchange rate,” said Masondo.

He told Parliament during questions to ministers in the economics cluster that the loan had to be repaid within five years.

He said when Finance Minister Tito Mboweni presented the special budget in June to fight Covid-19, he indicated four expenditure items they were worried about.

Masondo said two issues of concern were the wage bill and rising debt. However, the government wanted to stabilise debt by the 2023/2024 financial year. Debt was expected to rise to 81% of gross domestic product and deficit to reach 14%.

The revenue shortfall was expected to be at R300bn, said Masondo.

He said they were projecting an economic recovery for the country. However, “predicting how much the economy will grow is not always realised economic growth and the ability to raise revenue. We are committed to looking at the reprioritisation of our expenditure”.

He said the government needed to fix state-owned enterprises (SOEs) . There were 750 SOEs, and they needed to decide if they needed all of them. |