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South Africa's IMF loan | Africa's debt relief quandary

Posted by: The Conversation Global

Date: Wednesday, 29 July 2020

 

The International Monetary Fund has approved a $4.3bn loan for South Africa from a special funding facility designed to support countries needing urgent financing help. As Danny Bradlow explains, the IMF loan does not impose any conditions on how the funds can be used – over and above what is in South African law – which means that they will be subject to the same procurement and accounting requirements as other spending.

It seems counter intuitive, but the 25 African countries that were offered debt relief by world’s biggest multilateral lenders haven’t been rushing to get in the front of the queue. Only four – Cameroon, Côte d’Ivoire, Ethiopia and Senegal – have requested assistance. Most have either refused to apply, or have not yet requested a debt moratorium. Misheck Mutize sets out why.

Caroline Southey

Editor

South Africa’s finance minister Tito Mboweni says the IMF loan will limit the country’s economic vulnerabilities which have been exacerbated by COVID-19. Gallo Images/Brenton Geach

The IMF’s $4bn loan for South Africa: the pros, cons and potential pitfalls

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The IMF loan does not impose any conditions over and above what is in South African law on how the funds can be used; it only seems to expect the country to implement policies already announced.

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African countries should tread carefully over the debt relief offered by multilateral institutions and other lenders. It could prove very costly in the medium to long term.

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