Finance Minister Tito Mboweni says South Africa was not looking for budget support from the IMF, but rather “COVID-19-specific packages”.
South Africa has not approached the International Monetary Fund (IMF) for emergency financing to help it fight the COVID-19 pandemic that threatens to push the economy deeper into recession, an IMF official said on Tuesday.
Under its Rapid Financing Instrument (RFI), the Washington-based lender is granting emergency loans to nations that request the funding as the new coronavirus hammers economies worldwide.
“Around 90 countries have expressed interest in the IMF’s emergency financing. South Africa is not one of them. They have definitely not approached us for that,” said the IMF’s senior resident representative in South Africa, Montfort Mlachila.
“But we are continuously talking with the South African authorities with regard to providing economic policy advice on various aspects of the COVID-19 response, including on the fiscal side as well as on monetary and financial sector policy issues,” he told Reuters.
SA looking for COVID-19-specific packages
Earlier on Tuesday, Finance Minister Tito Mboweni said South Africa was not looking for budget support from the IMF, but rather “COVID-19-specific packages”, adding that the government was talking to the Fund about that.
Mboweni also ruled out an IMF structural adjustment programme.
South Africa’s economy entered a recession in the final quarter of last year, and the IMF now projects a contraction of 5.8% for 2020.
The number of confirmed new coronavirus cases in South Africa rose by 143 over the past day, taking the total to 2,415, the health minister said on Tuesday.
The rate of new infections has slowed significantly since President Cyril Ramaphosa ordered a nationwide lockdown late last month and extended it on Thursday to the end of April
Mlachila said the IMF does not fund health-related activities directly but that South Africa could access up to $4.2 billion if it decided to request financing under the RFI.
“Access is always dependent on a country’s circumstances; it depends on the size of the shock. And we would also look to see that any additional lending doesn’t undermine the public debt dynamics,” Mlachila said. “Ultimately, it is the country’s option to access the IMF resources if it so wishes.”
He added: “The RFI is a general purpose fund. … In many cases the money is lent to the central bank which can onlend it to the government. But there is no specific requirement that it is spent on certain things, it’s broad-based budget support. Naturally, we want the additional resources to be spent appropriately.”
IMF urges countries to continue testing
IMF Chief Economist Gita Gopinath has urged countries to continue to perform widespread testing and supporting their health systems to deal with the coronavirus pandemic.
She was presenting the IMF World Economic outlook on Tuesday. Gopinath has warned governments against trade restriction of medical supplies.
The multi-lateral financial body expects the global economy to contract by 3% in 2020 compared to the 3.3% it had projected earlier this year.
Gopinath says governments’ support to businesses and consumers will determine their speed of recovery.