Fin24

Presidency: IMF contribution not a gift

2012-06-20 08:26

Cape Town - South Africa's $2bn (about R16.4bn) commitment to an International Monetary Fund (IMF) firewall is not a gift but a sound financial investment, the presidency said on Wednesday.

"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 spokesperson 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 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, did not require an additional budgetary allocation and were critical in keeping the rand stable.

"If the global economy falls sharply, there is a serious risk that we will lose more jobs. In the last global recession we lost one million jobs. Our contribution to the IMF is intended to help stave off this kind of crisis happening again."

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

China has a lower per capita income than South Africa and yet has set aside $43bn.

India is "considerably poorer" and is allocating $10bn.

"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."

 

Comments
  • NrGx - 2012-06-20 08:44

    "While the news was welcomed by Business Unity SA as an important step in maintaining stable economic growth, the Congress of SA Trade Unions' (Cosatu) felt South Africa should be a beneficiary rather than a contributor." - typical of Cosatu, cannot think further than today and lining their own pockets. I think this is a very good move (finally) on SA's part.

  • Jacqueline - 2012-06-20 08:45

    Just as sound as the E-Tolling.

      martin.menge.73 - 2012-06-20 09:03

      actually yes. e-Tolling will have multiple benefits for the economy in the long run. People are focusing on the short term inflationary pressure, while, in the long run, similar tactics have helped many economies to focus and multiply local economies. This is a strategy that has has proved to work as far back as the Roman empire. Placing tolls shifts an economy to produce more locally and become more economically self-sufficient in the medium and long term. With the lifting of tolls many ancient cities had their economies bleed dry and caused their down fall.

      hugh.olphart - 2012-06-21 09:50

      interesting to note, Gordon had no idea how to pay the R20Bil owed on the e-toll project, going to the constitutional courts to have it overturned citing it will damage our credit reputation. But now there's R16 Bill available to "lend" Europe?? Liars and thieves.

  • Anneli Potgieter - 2012-06-20 08:45

    Is die mense Volstruise wat hulle koppe in die sand wegsteek en net sien en hoor wat hulle wil? Ons is afhanklik van die wêreld en om ons in die toekoms te beskerm moet obs bydrae tot die fonds. As ons net ophou om soveel geld te mors op hofsake en mense te betaal wat geskors is kan ons die geld terug he in die koffers vn die land binne n aansienlike tyd. Die wanbestuuring van ons belasting geld moet gestop word en ons moet n regering kry wat weet van regeer en nie speeletjies speel nie.

  • Carel de Lange - 2012-06-20 08:50

    The IMF fund is nothing more than a slush fund utilised by the West to destabilise mineral rich third world countries by war and other means. The ANC is obliged to contribute as they are a benefactor of the overthrow of a mineral rich country by the West. Little do you know that the corruption and political instability orchestrated by the ANC is all part of the big plan. It keeps the world powers rich and revolutionaries happy.

      zwartsj - 2012-06-20 09:00

      Im glad to see you don't participate in conspiracy theory's

      mario.dippenaar - 2012-06-20 09:06

      *citation needed*

  • Johan609 - 2012-06-20 09:09

    Unions is one of the biggest problems in this country. The idea is good, but in SA they induce a mentality of laziness and arrogance in workers that does infinitely more damage than 2bn dollars.

  • mthokozisi.mbele - 2012-06-20 09:09

    The investment is good,what is not good though is the gov that not show this urgency when it comes to solving internal matters...

      peterjohnjnb - 2012-06-20 09:50

      I couldn't agree with you more.

  • simphiwelucas.chauke - 2012-06-20 09:34

    SA government put it's global image first at the expense of the poor citizens hence not long they wanted us 2 pay Etolls. first they build world cup stadiums, then Gautrain and they commit gov funds 2 King Mzwatini. With the current leadership the poor will remain poor, the young will continue 2 suffer cause the government can't use its funds 2 create jobs.

  • nosiphom.mazibuko - 2012-06-20 09:40

    "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. Bloody hypocrite - the government has set aside 5 Billion to try and help the youth and you guys are blocking that? South Africa is part of the Global economy and since JZ we have fallen back big time, it is a good move for our reputation. Even if the Government wanted to use that money for infrastructure development, they would not have the capacity to make it happen, rather invest it for the future whilst re-planning the developments. It is your fault that you wanted the JZ government, that stalled all previous plans in favour of releasing them 3 years later under a different name, in the process three years of momentum was lost!

      TaniaSandraSteyn - 2012-06-20 11:26

      Wise, very wise.

  • grace.andtruth.77 - 2012-06-20 09:45

    WTF does the presidency know about 'sound financial investments'? Are the people of this country not worth investing in? I.e. Education, housing, water and electricity supply, nutrition, hospitals and medication etc etc etc !!!!!

  • peterjohnjnb - 2012-06-20 09:50

    FINALLY a semblance of foreign policy! I agree that perhaps better allocation of local funds to that tune would make a big impact on the lives of poor South African's - but then, that implies that there is a "state" to speak of to deliver those services and allocate those funds appropriately. In terms of ensuring South Africa's competitiveness, I think this was a good move.

      hugh.olphart - 2012-06-21 09:55

      Playing the fiddle while Rome burns. It would be sound if we weren't in such a financial mess. Charity begins at home. Cant pay the E-toll bill, but lend R16Bil to Europe?

  • andre.barendse.7 - 2012-06-20 09:56

    this takes the cake. Last time I checked we owe billions to the worldbank/IMF. Now we lend it back, with interest nogals? Thats double the inflation at the expense of the blue collar worker's savings... The result is that the buying power of the poor is halved, and the very real earth underneath them is exchanged for these imaginary numbers. The next step. offer them pay or job in the military, blow them up and reposes their property because they cant make payment. Not even satan is this evil!

  • zinhle.s.gumede - 2012-06-20 09:58

    I dont think SA is ready yet to make such big pledges while we still struggling with poverty.

  • Mtk.the.poet - 2012-06-20 10:44

    These Europeans bailed us out of apartheid,I watch the diffrent documentaries about former leaders like Mandela,Tambo,Sisulu etc how supportive Europe and US was,so now that they need our help we talking so much crap? BS!

  • Mtk.the.poet - 2012-06-20 10:51

    Ekse wtf you south africans realy want entlirk? Atleast this money done something of which if it didn't it was gonna evaporates in thin air,get over yourself and be real,as much as we criticise the gov but now, what's the point? Give thumbs down if you want,our daily life now is wake up and look in the news what bad thing happened in SA everyday,Come on guys!

  • stanley.matshika - 2012-06-20 16:00

    The goverment budgeted R5 billion for the youth and cosatu is blocking it,now they turn around and speak about poverty alleviation,what a lot of crap from them

  • Rational100 - 2012-06-21 07:48

    "a sound financial investment" my foot!! ...how about paying off all yo e-tolling debt before u go for sound investments!!

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