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IMF loan welcomed by ANC

Jun 20 2012 14:05

Johannesburg - The ANC has welcomed the $2bn (about R16.4bn) loan by the South African government to the International Monetary Fund (IMF) to prevent a global crisis threatening the world economy.

"We believe that South Africa, as a member of both the United Nations and the G20, has an obligation to join hands with the rest of the world in averting a repeat of the last global economic meltdown," ANC spokesperson Jackson Mthembu said in a statement on Wednesday.

"Our contribution, together with the rest of the world's countries, will enable the IMF to intervene decisively, using the crisis fund that has been established, to the imminent threat to the world economy."

Earlier, the presidency said the commitment to the IMF firewall was not a gift, but a sound financial investment.

"If the IMF uses the funds, the money is lent to the IMF and not a gift... (and) for all of this time the money will be earning interest for South Africa," President Jacob Zuma's spokesman Mac Maharaj said.

"The capital of the loan will ultimately be repaid to South Africa. It's like lending money to a very strong bank. This is not a risky loan."

Zuma committed some of South Africa's reserves at the G20 summit, a meeting of the world's greatest economies, in Los Cabos, Mexico on Monday.

At least $430bn (about R3.5 trillion) had been set aside to stave off the risk of another financial crisis, which would likely lead to a sharp decrease in global growth and rising unemployment.

IMF members could access the funds through a temporary loan, with conditions, and the reserves were not earmarked for any region.

While the news was welcomed by Business Unity SA as an important step in maintaining stable economic growth, the Congress of SA Trade Unions felt South Africa should be a beneficiary rather than a contributor.

"The decision must be reversed and the $2bn used to alleviate the plight of the poorest South Africans and to invest in the restructuring of our economy," spokesperson Patrick Craven said.

Maharaj reiterated that the funds were part of foreign reserves, and did not require an additional budgetary allocation, and were critical in keeping the rand stable.

The wealth of a country was not necessarily an indicator for how much should be set aside for the IMF, he said.

China had a lower per capita income than South African and yet, had set aside $43bn (about R352bn).

India was "considerably poorer" and was allocating $10bn (about R82bn).

"Like China and India, South Africa is a responsible global citizen. We are in the G20 to support global stabilisation and growth. We need to continue to do our duty," said Maharaj.

The Federation of Unions of SA said it supported the government's commitment to play a more progressive and responsible role within the IMF.

It said the money would counter financial market tensions and fiscal imbalances, which had a major impact on growth, employment creation and confidence.

"We are of the firm view that as long as the global economy remains vulnerable, there would be a negative impact on the lives of people across the world," general secretary Dennis George said in a statement.

"The issues of economic growth, employment creation, development and confidence are interconnected and inseparable and must be tackled holistically."

George said leadership of this nature was required in a time of crisis to deal with economic uncertainty.

"We are supportive of the explanation of President Zuma that resources will be made available for the whole membership of the IMF and not earmarked for any particular region."

anc  |  imf loan



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