South Africa managed to secure another R70 billion on Monday night, after the International Monetary Fund (IMF) approved the mega-bucks loan to fight the devastating impacts of COVID-19. However, at a time where corruption has returned to its usual spot under the microscope, the fine print makes for an interesting read.
IMF loan: The protections in place to prevent corruption
The IMF has set its stall out very clearly: They have put a number of 'anti-corruption clauses' into their agreement with South Africa, explaining the terms and conditions in a stern and uncompromising fashion:
In a recently-issued statement, the organisation told our government to 'transparently monitor' all use of these emergency funds.
- All spending from this fund must be reported, so the IMF can see if their money is being spent in the agreed manner.[*]The IMF has told South Africa to 'preserve the central bank's inflation mandate'.[*]They want to see 'proactive bank regulations' to distribute the funds, with increased supervision for 'smaller banks'.[*]In the short-term, the IMF has advised that the money is used for healthcare, and to increase protections for the poor and unemployed. These conditions were set out in SA's June Supplementary Budget Review.
IMF demand 'transparency' from South Africa
The group has directly addressed South Africa's issues with corruption. Fresh from the state capture scandal which gutted the country during Jacob Zuma's presidency, the political looters have seemingly hit a new rock bottom this time around: There have been multiple reports of officials 'stealing' from the R500 billion COVID-19 relief fund, and it's something the IMF has already called out:
"The authorities' commitment to transparently monitor and report all use of emergency funds is crucial to ensuring COVID-19-related spending reaches the targeted objectives."
"There is a pressing need to strengthen economic fundamentals and ensure debt sustainability by carrying out fiscal consolidation, improving the governance and operations of SOEs, and implementing other growth-enhancing structural reforms."
COVID-19 corruption and the R70bn loan – what could go wrong?
The DA, meanwhile, has stated that the IMF's dressing-down is 'embarrassing' for South Africa, and claims their stark warnings on corruption are much more decisive than anything published by Treasury. Geordin Hill-Lewis, the shadow finance minister, has challenged Tito Mboweni to give monthly briefings on how every last cent of this loan will be spent.
"The loan comes amidst growing evidence of a pervasive corrupt feeding frenzy by ANC 'COVID-preneurs' who are stealing the relief funds. The IMF's executive board's statement last night issued stark warnings to South Africa. Their statement stands in contrast to the non-committal waffle released by the Treasury."
"We request that Finance Minister Tito Mboweni publishes detailed monthly reports on the disbursement of COVID relief funds, how they are being spent, and which companies are beneficiaries and who the directors of those companies are. He must also appear before Parliament to answer questions on spending from MPs."Geordin Hill-Lewis