Government seeking R95bn from multilateral lenders to fight virus – Treasury official

South Africa is seeking R95 billion from multilateral lenders to help it fight the Covid pandemic, a senior Treasury official said on Sunday.

Africa’s most advanced economy is talking to the International Monetary Fund (IMF), World Bank, New Development Bank of the BRICS and African Development Bank to source funding to contribute to a R500 billion rescue package aimed at cushioning the impact of the new coronavirus on businesses and poor households.

The IMF has said South Africa is entitled to apply for up to $4.2 billion in response to the crisis, and Finance Minister Tito Mboweni said on Friday the government could negotiate for a facility of “maybe between $55 and $60 million” at the World Bank.

Dondo Mogajane, director general of the National Treasury, said in an interview with eNCA television on Sunday that South Africa “will certainly go” for the IMF funding.

“The World Bank has said …South Africa can access a loan of about $50 million, the New Development Bank did say long ago that they have set aside a billion dollars that we can access and again we will be accessing that,” Mogajane said.

“All in all, all of these interventions, currently we are looking at R95 billion coming from these institutions only for Covid-related interventions.”

Mogajane said the government has to do everything at its disposal to make sure the coronavirus is contained, including reprioritising money from projects that are not a priority for now and looking for new cheap money.

“I am emphasising new money that is cheap because currently the discussions obviously should centre around what the term rates are going to be. That is where we are currently, we are discussing with them (lenders),” he said.

“The IMF has said upfront that it is 1% interest that is available so we will certainly go for it because it is cheap.”

Mboweni on Friday played down worries in some governing party circles and within the influential trade union movement that the money would come with onerous conditions.

An IMF official told Reuters that the emergency funds on offer came with no requirement for a structural adjustment programme.

The economy was in recession when the virus outbreak hit South Africa and public finances were already strained as the government bailed out struggling state firms.

South Africa had recorded 4 361 cases, including 86 deaths, with 161 004 people tested for the virus as of Saturday.