ANC, partners turn to Ramaphosa to stop Mboweni calling on World Bank, IMF for bailout

Finance Minister Tito Mboweni. (GCIS)
Finance Minister Tito Mboweni. (GCIS)

The ANC and its tripartite alliance partners, the SACP and Cosatu, have hit back at Finance Minister Tito Mboweni, rejecting his comments that he would turn to the World Bank and International Monetary Fund (IMF) for economic relief if the need arises. 

In a letter to President Cyril Ramaphosa - signed by ANC secretary-general Ace Magashule, SACP deputy general-secretary Solly Mapaila and Cosatu general-secretary Bheki Ntshalintshali - the tripartite alliance said Mboweni's remarks served to underscore the importance of a coherent and disciplined approach to communication. 

"We reject this proposal. We instead reaffirm the need to safeguard South Africa's democratic national sovereignty, the fundamental right to self-determination, our independence which is non-negotiable, even in the midst of the crisis," the letter read.

South Africa was hit with a double whammy when ratings agency Moody's stripped the country of its investment grade rating, downgrading government bonds to "junk" less than two weeks ago.

Another ratings agency, Fitch, dropped the country a further into non-investment grade on Friday. Fitch already had South Africa's investment rating at junk status ahead of the move.

Last month, Mboweni told City Press he wouldn't hesitate to go to the World Bank or the IMF for help if the country needed it.

READ | Rand’s record-busting slump may not be over, options suggest

"There is no time for ideology. If not IMF, then give me the money. I cannot eat ideology," he told the newspaper.

Mboweni added that South Africa wasn't yet in a position where it needed to knock on the institutions' doors, saying his team at National Treasury was only planning to prevent being caught off guard in future.

With South Africa already in the grips of a recession before the Covid-19 pandemic exploded, the lockdown aimed at preventing the spread of the disease is likely to further weaken the economy. To make matters worse, South Africa's unemployment rate has shown no sign of easing off, sitting at 29%, the worst since 2008.

In their counter proposals to Mboweni, the ANC-led alliance suggests that government turn to the South African Reserve Bank to play a more developmental role, collaborating with financial institutions as well as National Treasury. 

"Government should evaluate and explore all sources of domestic finance including industrial retirement funds as well as policy instruments to tap into sources in a sustainable and mutually beneficial manner to turn round South Africa in the interest of all the people especially working class and poor." 

The alliance also proposed government explore appealing to the new Bric development bank and other forms of cooperation from countries like China and Russia. 

"Any terms involved in such loans, cooperation and assistance must be clearly understood, negotiated and consulted on with social partners and none should undermine our national sovereignty." 

The secretariat also called for government to increase its stake in Sasol, as well as other strategic sectors of the economy. 

The alliance secretariat said it would establish a task team to respond to the impact of the Covid-19 pandemic. The task team will introduce proposals to mitigate the effects of the virus and prepare the ground for recovery, the letter reads. 

The task team will include ANC deputy secretary general Jesse Duarte, Enoch Godongwane and the SACP's second deputy general secretary Chris Matlhako. 

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