IMF dangles another carrot for SA government

The World Bank and the International Monetary Fund (IMF) have historically been objects of fear and revulsion
in South Africa.

Pre-1994, the National Party government viewed them as the sinister tools of international capitalism. Post-1994, the ANC alliance has held the same opinion but from a radical ideological perspective – these are evil entities cunningly retarding the growth of socialist utopias by smothering them with US dollars.

Given the backstory, it was interesting to see the response to the announcement of a World Bank loan to SA of $750 million (about R11.5 billion) on extremely generous terms. This bonanza follows upon previous capitalist largesse of $4.3 billion from the IMF two years ago.

When the IMF loan was solicited by SA in 2020, President Cyril Ramaphosa and his finance-cluster team spent a lot of time dampening the outrage of the ANC left. This time, however, there was not a peep of protest. The reality of having to fill a gaping hole in the Treasure bucket has forced the governing alliance to bite its tongue.

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But the ANC should remember that everything comes with conditions. Large infusions of World Bank and IMF bailout funds bring dependence and with dependence comes behaviour modifications. Sometimes it’s a carrot, sometimes a stick.

It’s an indication of the World Bank/IMF fears of a post-Ramaphosa apocalypse that, so far, it’s all been carrot. These powerful institutions are leaning over backwards to accommodate financing requests from the SA government because they are keen to support

Ramaphosa in the face of the radical economic transformation challenge. That means applying lots of lippy to camouflage porky. Announcing the loan, the World Bank said SA had taken “bold steps” to mitigate the effects of the Covid crisis and used it as an “opportunity to tackle structural reforms”.

Among the “major breakthroughs” have been its management of the electricity crisis, climate change and the digitalisation of social grants and health programmes. There have also been “promises of reform”. These are desperate justifications.

This week, the evidence for the Ramaphosa administration’s pace-setting reform agenda was not good. The Special Investigating Unit (SIU) released its report into the government’s administration of Covid-relief funds. The SIU examined less than a tenth of the R152.5 billion spent on Covid related tenders. It found that R7.8 billion – more than one of every two rands spent – had been stolen.

Almost twothirds (62%) of the contracts scrutinised were irregular. The scale of the looting is of Zumaesque proportions but undertaken under a “clean” Ramaphosa administration. And the scandal reaches into the highest levels of his administration, including his former health minister and his former spokesperson.

Ramaphosa was shaken, but not stirred. Both remain high-ranking ANC office bearers. No one has been prosecuted. Judging by the level of ANC economic insight displayed here, the World Bank and IMF may face some delays on their loan repayments.

Or perhaps they’ll move from carrot to stick.