In his emergency supplementary budget speech, Finance Minister Tito Mboweni said that the government will borrow US$7bn (R118bn) from International finance institutions, making it very clear that the funds need to be repaid.
“Without external support, these borrowings will almost entirely consume all of our annual domestic saving, leaving no scope for investment or borrowing by anyone else. For this reason, we need to access new sources of funding. Government intends to borrow about US$7bn from international finance institutions to support the pandemic response. We must make no mistake, these are still borrowings. They are not a source of revenue. They must be paid back.”
“This includes a US$1bn loan from the New Development Bank. As a member of the International Monetary Fund (IMF), South Africa intends to borrow US$4.2bn through the IMF’s rapid financing instrument, which is a low-interest emergency facility.”
Mboweni says that the country needs to access new sources of funding as the country is in a race to stabilise its growing debt if it was to avoid a looming crisis which would see it unable to service its debt.
- the national share for 2020/21 increases from R758 billion to R790 billion,
- the provincial share decreases from R649 billion to R645 billion; and
- the local government share increases from R133 billion to R140 billion.
“We value the important work public servants do. Minister Senzo Mchunu is negotiating with our partners in the labour movement to find a balanced solution that sets compensation at an appropriate, affordable, and fair level,” he says without adding further detail.