Government is between a rock and a hard place

You have to have some sympathy for the ruling party in this country because, when it comes to some matters of policy and international relations, they are damned if they do; and damned if they don’t.

Without the merest hint of irony, its opponents like the Democratic Alliance (DA) are now attacking it for not jumping up with alacrity and accepting loans from the International Monetary fund (IMF) … yet two years ago, that same opposition were using the IMF as a stick to beat the  ANC with because going to the global body means acknowledging a total failure of fiscal policy.

Currently, the IMF is offering emergency bail-outs for countries hit by the financial impacts of coronavirus and which don’t have the massive financial muscle that the Western nations do. These loans are, at face value, free from some of the “strings attached” clauses which other IMF financial instruments come with.

The reality is that, even once the crisis is over, South Africa is still going to need bailing out. And the country has already attained “junk status” from all the international ratings agencies, which means it won’t be a great destination for investment cash or loans.

The IMF might be the institution of last resort to help prevent us from becoming a failed state.

That has serious negative implications, which go beyond mere ideological objections, as the DA claims.

The IMF will want to curtail social spending – as it did in Zimabwe with that country’s Economic Structural Adjustment programmes. In Zimbabwe, that led to a massive increase in poverty, which sparked the seizure of white farms as a diversion by the Mugabe government.

On the other hand, the IMF’s “harsh medicine” also comes with processes which make corruption much more difficult to pull off.

It won’t be an easy decision – but we may have no choice.

For more news your way, download The Citizen’s app for iOS and Android.