THE International Monetary Fund (IMF) will be discussing South Africa’s request for financial support to fight Covid-19, a spokesperson said.
During a press briefing by IMF Communications Director Gerry Rice on Thursday, he confirmed that the IMF’s management had been engaging with the South African government and plans to present the country’s request for financial support to the board. Rice did not say when these discussions will take place, nor did he confirm the amount of financial support being requested.
‘South Africa has requested support from the IMF under the rapid financing instrument… that is something that will be in discussion with the executive board,’ Rice said.
Rice said funding under the rapid emergency instrument is not subject to normal IMF conditions.
The IMF has received over 100 requests from its member countries, something which is ‘unprecedented’, said Rice. The IMF has since doubled the access to its emergency facilities and its rapid credit facility to enable it to meet $100bn in anticipated demand. The IMF board has granted financing of $18bn to 50 countries, since the beginning of April to May 6.
IMF has also called a suspension of debt payments, which was endorsed by the G20 countries. So far, the IMF has granted debt relief to 25 countries.
The National Treasury has told Parliament that South Africa is seeking as much as $4.2bn from the IMF, strictly to respond to the Covid-19 crisis. These funds are part of a R500bn ($27bn) stimulus package set up by the government. An amount of R130 billion is to be reprioritised from the 2020 budget, about R200 billion is attributed to a loan guarantee scheme and the balance will be sought from domestic sources such as the UIF and multilateral institutions such as the IMF, World Bank and the New Development Bank (NDB). The NDB is in the process of finalising a $1.5bn loan to South Africa.
South Africa meanwhile has embarked on a risk-adjusted strategy to slowly reopen the economy. Treasury expects growth to contract by as much as 16.1 percent this year, in a worst-case scenario, this as the global economy enters into a recession. The country has suffered three credit downgrades in recent weeks, which has seen it fall out of the government bond index, worsening its prospects. Business confidence has slumped to a record low since the nationwide lockdown was instituted to slow the spread of Covid-19.
Reserve Bank Governor Lesetja Kganyago has said that the need for structural reforms to the SA economy has become more apparent.