COVID-19 international funding won’t come with onerous conditions: Makhaya

President Cyril Ramaphosa’s economic advisor Trudi Makhaya says funding from international funding institutions such as the Brics Bank, IMF and the World Bank won’t come with onerous conditions as the funding is to deal with a crisis not of South Africa’s making.

President Ramaphosa announced a R500 billion support package for South Africa to deal with the economic effects of COVID-19. The package includes R130 billion that is re-prioritised from South Africa’s current budget. Other sources of funding for the package will come from international funding institutions.

The support package is phase two of the economic interventions that government has announced.

Makhaya says the interest rates of the international funding will be reasonable.

“I think the idea there is that, as a continent, we’ve been advocating very hard on global platforms that we have that this is a global pandemic. None of our countries should be expected to shoulder this crisis on our own and that the international community should come to the party and help us to have a global solution to this. The best channel for the international community to channel those resources is through financial institutions like the IMF and the World Bank. That funding is not going to come with onerous conditions … the kind of conditions that you would have seen in the past because it’s a recognition that this funding is to deal with a crisis not of our making. So, it will be concessional. The interest rates will be reasonable, and the terms and conditions will also be in line with the crisis mode that we are in.”

Trudi Makhaya breaks down the COVID-19 stimulus package:

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Makhaya says South Africa has to get the growth rate going in the long term in order to repay all its debt.

“There is really one argument that could be made and that is we have to get the growth rate going in the long term to ensure that we are able to repay our debt and also that, as our debt is a proportion of GDP, is reasonable. Taking the measures to mitigate against COVID-19 at least ensures that we don’t have a complete economic catastrophe so we secure the economy that we have now.”

Below is the breakdown of the announced R500 billion COVID-19 Economic plan:

President Cyril Ramaphosa announces a R500 billion economic stimulus package. 

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In the video below, Trudy Makhaya speaks about the R500 billion economic stimulus package announced by Ramaphosa. 

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