In July 2020, South Africa secured a R70bn loan from the International Monetary Fund; R5bn from the African Development Bank; and in the same month a R14.5bn from the New Development Bank in April 2021; and recently a R7.6 billion from the World Bank for the country’s Covid-19 Emergency Response Project. South Africa is already spending billions of rands per year in loan repayments and basic services to its people are waning and in some cases non-existent. These loans are made despite the fact that the government can mobilise internal financial resources, such as taxing the rich, stopping illicit financial flows, just to mention a few.
Gross loan debt has increased from R2.5 trillion in 2017/18 to R4.3 trillion in 2021/22. The government has therefore borrowed an additional R1.8 trillion from both domestic and international investors.
The Alliance is concerned about the impacts of these loans and the austerity measures that generally accompany it. Furthermore, with corruption as part of the DNA of the government, their ability to manage these funds prudently, is highly questionable. They are placing the country further and further into a debt trap. Who will be burdened with this? The working class and the poor will not only have to tighten their belts, it will more likely be a noose around their necks.
Prices of food and other essentials are rising at an alarming rate. People’s basic survival hangs in the balance, while corruption and “state capture” is on the increase. Unemployment has already reached crisis proportions, and with these loans, it will exacerbate the dire situation.
South africa should take into account the experience of other african countries and what the IMF and World Bank has done to these nations, has had disastrous impacts on development. The World Bank and IMF have forced developing countries to create conditions that benefit western corporations and governments. These conditions are known as structural adjustment programs, which require governments to: cut public spending, including eliminating subsidies for food, medical care and education, and privatization of state enterprises. IMF programs are designed to extract as much as possible from working people, to pay for a crisis created by big business and international finance capital. In effect, the IMF and World Bank have demanded that poor nations lower the standard of living of their people. They have increased poverty and inequality.and the consistent austerity measures throughout. Already the South African government has opened the door by creating a conducive environment for the IMF and World Bank through their neo-liberal policies since 1994 (GEAR/ASGISA economic policies).
Treasury said that the loans are not subjected to “ conditionalities that compromise its fiscal sovereignty.” However, fiscal sovereignty is always undermined as lenders (IMF, World Bank, etc) will pull the strings and tell us how to dance. The measures pursued under monetary, fiscal and trade policy since 1994, clearly show that an austerity stabilization programme has been in place. This is similar to the policies as prescribed by the IMF: They insist on austerity measures which include; cutting government borrowing and spending, lowering taxes and import tariffs, raising interest rates.
The current economic and social suffering that the working class and the poor endures, is a direct effect of structural adjustments that started a long time ago.
We have to be resolute and demand that our government: