There will be "no coming back" for the SA economy if a loan is sought from the International Monetary Fund (IMF) to finance debt obligations, members of Parliament have heard.
The standing and select committees on finance on Wednesday heard inputs from the public on the mini budget. Among the biggest concerns raised by trade unions and research groups is SA's growing debt, set to peak at 60% of GDP by 2023/24.
Last week Finance Minister Tito Mboweni told committees that if SA ends up in a debt trap, the country would be forced to go to the IMF, an undesirable condition.
Matthew Parks, parliamentary coordinator for Cosatu, also issued a warning against approaching the IMF. "We see what happened to Greece and Ireland… if the IMF could molest Greece and Ireland, who are we as SA to survive them?" he asked.
Parks said that the conditions attached to the IMF's loans to the two countries left them in an economic depression.
Fedusa general secretary Dr Dennis George, who had been invited along with Treasury to engage with the IMF and the World Bank, said that SA should not borrow from the IMF. "Their conditions will kill you."
SA will lose its sovereignty and the IMF could deploy its own people to Treasury. "It will be far worse than what the Guptas did to us," he said.
OUTA's Matt Johnson also warned against approaching the IMF as SA would lose sovereignty. The IMF will impose structural adjustment programmes, SA should rather implement its own adjustment programmes without losing sovereignty. Johnson said that it will be difficult but sacrifices are needed to stabilise debt.
Professor Jannie Rossouw who represented the Fiscal Cliff Study Group said that SA is closer to reaching the fiscal cliff – partly due to Treasury's overstated growth projections.
When Treasury overstated growth projections, it means that tax revenue projections is also overstated and by so doing influences government expenditure which will be far greater than it should be, he explained.
"Treasury's forecasts make weather forecasts look good," Rossouw said. "It is necessary for Treasury to restore the integrity of its forecasts because it is getting this country into fiscal trouble … we need responsible growth forecasts from Treasury."
Rossouw implored that government do the right thing to avert a fiscal cliff, if not then government will be forced to approach the IMF.
"They will force you to do it [avoid a fiscal cliff]. You can do it voluntarily, or be forced. The IMF will not recommend anything else besides what the Fiscal Cliff Study Group and other [research] groups have recommended – to stay away from the fiscal cliff."
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