OPINIONISTA: Borrowing from the IMF will only deepen South Africa’s crisis

He is speaking of an imminent “By doing so he is pretending that the R1.8-R2-trillion state pension and unemployment insurance mega funds don’t exist – half of them currently placed on the shaky stock market. He believes nothing can be done to halt the $10-25-billion in illicit capital outflows from South Africa every year.

In his Budget speech today , we instead expect the finance minister to speak more about the International Monetary Fund and the$4.2-billion loan he has applied for, arm in arm with President Cyril Ramaphosa and the governor of the SARB, in 2018; “the primary policy advisory committee of the IMF Board of Governors”. We can also predict that the IMF will approve the application for this loan, which the finance minister has assured everyone comes without conditions.

But on that point, the United Nations Conference for Trade and Industry has a different view. UNCTAD is against new loans from global institutions to governments in trouble. It does not support the mere The reason for this is that, to the government, private international capital is the only basis there is for reconstituting the South African economy.The loan is a kind of credit card. Right now Eskom has used about $3.111-billion of the allowed $3.75-billion credit. Eskom increased its debt to the World Bank by $20-million in the 2019 financial year. Another $54.8-million has been used since then; $34.8-million was drawn in June.

The cost for a dollar loan increases when the rand falls in value. When Eskom opened the credit line in April 2010, the rand stood at R7.33 to the dollar. On 31 March 2019, $3.056-billion of the credit had been used. The exchange rate was R14.48. The value of the rand to the dollar had almost halved, and the debt in rands corresponded to R44.3-billion, or 10% of Eskom’s total official debt declared in the 2019 annual report.

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