Mboweni admits IMF loan may be used to finance government salaries

Mboweni admits IMF loan may be used to finance government salaries

- The Democratic Alliance has condemned Finance Minister Tito Mboweni for his u-turn on what the IMF loan will be used for

- The minister recently admitted that the $4.3 billion loan may be used to pay ANC salaries

- The opposition party is furious that the nation's debt will be used to finance salary payments for government employees

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The Democratic Alliance has lashed out against Finance Minister Tito Mboweni for his changed stance on the massively inflated public wage bill.

Responding to a parliamentary question on the $4.3 billion loan granted by the International Monetary Fund, Mboweni had answered that:

“The loan receipts (or disbursements) will form part of the National Revenue Fund to be used to support existing government programmes, which could include salary payments.”
coronavirus

Mboweni has admitted some of the loan will be used to finance salaries. Image: Flickr/ GovernmentZA
Source: UGC

In response to the minister's comment, the DA's Leon Schreiber has commented that:

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"This sudden change by Mboweni from his avowed position of prudential public financial management to debt-fueled public spending is hardly surprising. It is now public knowledge that his economic reform crusade has been rejected outright by his Cabinet colleagues who have repeatedly shown a willingness to send South Africa over the fiscal cliff through unrestrained spending."

Schreiber pointed to growing discontent that the majority of government spending is absorbed by wages:

"For years now, the consensus among International Financial Institutions (IFIs), rating agencies, economists and even some in Treasury itself is that the country’s public wage bill had become unsustainable and needed to be cut to prevent a budget blow out. Initially a strong proponent of this position, Mboweni now seems intent on appeasing the trade unions by acceding to their demands for additional spending on the public wage bill."

As for Mboweni's apparent agreement with using the loan to pay salaries, the DA raised the view that:

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"By admitting that the IMF loan could be used to pay salaries, Mboweni has reneged on the spending commitments he made in his Letter of Intent to obtain financial support under the IMF’s emergency financing instrument. The LOI committed government to use IMF emergency assistance to support health and frontline services, solve the balance of payments problems caused by the pandemic, protect the vulnerable, support economic reform, drive job creation and stabilise public debt."

The opposition party has now written to the IMF to object to this notion, confirming that:

"The DA has already written to the IMF to register our strong objection to Mboweni’s intention to spend another R10 billion on bailing out South African Airways. In our next correspondence with the IMF, we will similarly inform the Fund that Mboweni has now decided to abuse the $4.3 billion loan to pay salary increases for ANC cadres."

Earlier, Briefly.co.za reported that the International Monetary Fund has approved a R70.7 billion loan to South Africa in a bid to address the socio-economic impact of Covid-19.

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This will be South Africa's first-ever loan from the fund and is expected to be paid in the next few days.

The Economic Freedom Fighters have reacted to this news with fierce condemnation:

"The EFF rejects the decision by the IMF Executive Board to approve South Africa's request for a loan of R70.7 billion. This is the biggest political blunder in the history of South Africa."

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Source: Briefly.co.za

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