IMF loan ‘no good for SA’ – economist
Economist Duma Gqubule believes no good will come from government’s decision to approach the International Monetary Fund (IMF) for a loan.
On Monday, the IMF approved South Africa's $4.2 billion loan to support the government's fight against Covid-19.
Gqulube says SA can’t afford to take on more foreign debt.
“There’s no need for South Africa to go to the IMF, we’ve got deep domestic capital markets which can fund this R70 billion easily.
“The cause of all emerging market currency crisis has been exposure to foreign currency debt.”
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Gqulube is worried the loan will only add to the country’s deepening fiscal crisis.
“I think this loan is to prepare South Africa politically for the fully-blown IMF structural adjustment programme. It’s a political decision to go to the IMF.
“The reforms that we have committed to as South Africa, they’re not going to add anything to our economy in terms of growth.
“The austerity is quite counterproductive. It will result in a worse debt crisis and it will plunge our economy into three years of recession I believe.”
He adds that the loan is unsustainable.
“It’s not going to last us even two seconds. That money will be used to finance the government’s deficit and then it’s gone.
“It’s not going to make any difference to South Africa right now.”
Listen to Gqulube below: