R11bn loan from World bank a ‘theft risk’ in SA, warns expert

South Africa has yet again borrowed a mountain of cash from the World Bank.

It is more than R11 billion and it is supposed to be for socioeconomic recovery efforts due to the pandemic. It’s not the first Covid-related loan, either. Last year June, the International Monetary Fund lent the fiscus R70 billion in immediate Covid relief.

In its statement announcing the loan, Dondo Mogajane, director-general of Treasury said: “It will assist in addressing the immediate challenge of financing critical health and social safety net programmes, while also continuing to develop our economic reform agenda to build back better.”

South Africa’s total debt stands at about $261 billion (about R4.2 trillion). The interest and repayment terms of both loans remain a mystery, for now. The World Bank referred Saturday Citizen to Treasury, which did not respond at the time of going to print.

Economist Dawie Roodt said that whatever the terms may be, it was likely the rand would weaken over the repayment period.

“Forget about the interest rate, the currency risk could end up costing far more than the interest charged.” Roodt added the preconditions of the loan were likely to be soft, like attempting to limit spending on public sector salaries.

“Ultimately, I really hope the money was not borrowed to be stolen. Previous Covid funds were stolen by ‘ineptocrats’ and this just again illustrates the massive scale of corruption in South Africa.”

The EFF launched a scathing attack. It said: “The National Treasury is using the plight of the poor and the Covid crisis to entrench neoliberal policies.

“It is a fallacy that the R11 billion World Bank loan will help poor people in any way. The same was said about
the R70 billion IMF loan, but parasitic charlatans of the ruling party looted it while hundreds died waiting for vaccines.”

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The freshly minted loan amounts to roughly the same quantum as alleged fraudulent wheeling and dealing around
personal protective equipment (PPE) and other Covid-related contracts similar to Digital Vibes, that robbed taxpayers of R13 billion in total.

The Special Investigating Unit handed President Cyril Ramaphosa a report on its probe into PPE on 11 December. Tyrone Seale, spokesperson for the Presidency, said the report remained under consideration.

Action SA leader Herman Mashaba told Saturday Citizen: “If President Ramaphosa thinks getting South Africa out of its financial woes is by borrowing money from the World Bank or any financial institution in the world, I am telling him that this will only dig a bigger hole for our country,” he said.

“Someone please advise the president that South African financial woes can only be addressed by economic growth,” the ActionSA leader said.

Economic growth is driven by government creating a conducive environment for private sector investments, decisive leadership and fighting corruption in your government, Mashaba said.

Mashaba said if energy had been focused on recovery of funds looted by comrades, just from PPE, further loans would have been unnecessary. Dion George of the Democratic Alliance questioned how the funds would be spent.

“If this money is used for social benefit without boosting economic growth, it’s just a further liability and could mean economic stagnation and a faster spiral of debt,” George added.

– news@citizen.co.za