South Africa Breaks Vow, Approaches IMF for $4.2bn Loan

• South Africa Approached IMF for $4.2 Billion Loan as COVID-19 Bites

South Africa, Africa’s second-largest economy, is presently in talks with the International Monetary Fund (IMF) for a $4.2 billion loan, according to a Bloomberg report.

Despite the Cyril Ramaphosa led government promising the South African people he has put a lid on loans, COVID-19 damage has compelled the president to crawl back to the fund for assistance.

However, Ramaphosa party, the African National Congress and other allies are worried that the new loan will further hurt South Africa’s credit rating, especially with its current recession and IMF’s method of dictating policy direction following loan approval.

“This is a precursor because Cyril’s government doesn’t have the resources,” said Lumkile Mondi, economics lecturer at Johannesburg’s University of the Witwatersrand. “This is just to soften the alliance partners in preparation for a much bigger ask.”

It is uncertain if ANC members, oppositions and the entire South African population — that over the years have refuted the urge to approach the Washington based organisation for financial assistance despite their numerous challenges — will approve or support President Cyril Ramaphosa’s new position on foreign loan.

“One of the things the ANC had in its DNA, you don’t want to go the IMF, you will undermine your sovereignty,” said Matthew Parks, parliamentary coordinator for the 1.8 million-member Congress of South African Trade Unions, which has supported the ANC since Nelson Mandela took power in 1994. “The president pleaded with us. We accepted it given the extraordinary challenges.”