Unions in dilemma over IMF loans to government, says analyst

The South African labour movement’s silence following President Cyril Ramaphosa’s mention of the International Monetary Fund (IMF) during his speech on fiscal stimulus during the Covid-19 crisis exposed the dilemma in which unions found themselves, political analyst Ralph Mathekga said yesterday.

“To date, the World Bank, IMF, Brics New Development Bank and the African Development Bank have been approached and are working with Treasury on various funding transactions.

“Some of these institutions have created financing packages that are aimed at assisting countries that are having to address the coronavirus crisis, like us,” said Ramaphosa.

Ironically, an ANC-SA Communist Party-Cosatu-Sanco alliance leadership meeting held recently opposed any overtures by government to the IMF and the World Bank for funding during the pandemic crisis, to avoid any strings that might be attached to loans.

“I think unions are in a dilemma over the IMF money, because it will also be used to alleviate conditions of the poor, by transferring grants,” said Mathekga.

“It therefore becomes difficult for unions to take a hostile stance towards an IMF loan because it is spent in the direction of the poor.

“A political balance has been struck by President Ramaphosa here.”

Mathekga said any loan came with conditions.

“It has to be paid back. If I lend you development money and you start throwing parties, I’ll ask questions about your abilities. Written in the loan is a demand for transparency,” he said.

Given South Africa’s level of graft and malfeasance exposed during the Commission of Inquiry into State Capture and in recent questionable tenders during the coronavirus crisis, Mathekga said: “Such huge funds create opportunities for corruption.

“There are serious questions on the public service having the capacity to implement programmes efficiently. This problem will not go away.

“Perhaps, the president can set up an accountability structure made up of social partners like business, unions and other organs of civil society.”

University of Johannesburg economics Professor Hardus van Zyl welcomed government’s move to bring the IMF on board, saying South Africa was “already in a technical recession and the stimulus package had to be huge, given the distress of the business sector – especially small businesses – and the huge unemployment rate”.

“The ruling ANC-SACP-Cosatu-Sanco alliance had no option but to knock on the door of international institutions such as the IMF,” said Van Zyl. “I am in favour of this move because these institutions demand fiscal discipline and effective economic policies.

“South Africa now has the ideal opportunity to implement an economic model that is highly efficient and will create a high level of real economic development that can address the unemployment problem much more effectively.

“The government fiscal and monetary authorities will now enter into negotiations with the IMF and the World Bank.

“They will most certainly have conditions in place before this kind of funding will be released.

“I definitely foresee structural changes in the economy.

“Now is the time to shake up the state-owned enterprises sector and get rid of unnecessary red tape.”

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