World Bank loan: MPs slam ‘reckless borrowing’

Members of Parliament (MPs) have rejected Treasury’s R11 billion World Bank loan, saying it was unaffordable for an over-indebted country.

Briefing MPs on the loan on Tuesday, Finance Minister Enoch Godongwana stated that government regularly sought loans, and the World Bank granted it a policy development loan.

“Given its terms and conditions, which were palatable to us, compared to what is available in the market, we went for the World Bank loan,” he said.

However, MPs criticised government, accusing it of sending confusing messages on what the money was meant for.

“When they first spoke about procuring the loan, they said it was for social relief. Now we heard from the minister yesterday that it’s for policy development. Treasury and minister are unable or unwilling to tell us what the loan is really for,” DA MP Deon George and member of Parliament’s finance committee told 702.

It seemed the money would be used for whatever government deemed fit, he added.

“This is going to push up the debt level. This dollar loan will have to be paid in dollars. We all know that government hasn’t managed our money well… we don’t believe South Africa needs this loan.

“If we didn’t have corruption and having to bail out SOEs, we wouldn’t be here.”

ALSO READ: EFF demands urgent meeting with Godongwana over World Bank loan

Despite South Africa’s national debt sitting at R3.4 trillion, there was still no clear plan on debt management from Treasury, said committee chairperson Joe Maswanganyi.

“That is reckless borrowing. We all have bank accounts and should know that if you just borrow like that, should you die, that debt will have to be serviced by your children and grandkids, and will have an impact on generations to come.

“We have a problem of debt to GDP as we speak,” Maswanganyi told the radio station.

He remarked that debt was the country’s third fastest growing service expenditure, below education and social development.

Maswanganyi said the committee will be ready to interrogate government’s borrowing and debt after Godongwana presents his maiden budget speech on 23 February.

“We’ve been tackling this issue of debt this for some time now. The committee has in 2018 taken resolutions on how the debts should be managed, which were adopted by National Assembly on the debt.

“The minister will appear before the committee the next day, and will have to speak on the debt and specifically on this R11 billion that they secured.”

The Economic Freedom Fighters (EFF) on Tuesday called for an urgent meeting with Godongwana.

The party wants the finance minister to clarify the terms and conditions behind the loan.

“The EFF Rejects the irrational and senseless R11 billion World Bank loan to South Africa with contempt. It will only lead to future bondage to the control and ownership of rating agencies, financiers, and the Washington Consensus,” said the EFF in a statement.

George said the National Assembly should reject Godongwana’s upcoming budget.

“Parliament should reject that budget because what’s going to be in that budget is inflation of interest rates as a result of additional debt.

“What we should be saying is that government needs to cap debt and start to efficiently manage it.”

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

Compiled by Getrude Makhafola.