IMF: No discussions with SA

South Africa has not approached the International Monetary Fund (IMF) for assistance in dealing with the economic fallout of the Covid-19 crisis.

This is according to Abebe Aemro Selassie, director of the African Department at the IMF.

“There are no discussions on financing with [the] South African government,” he said at a media briefing on the regional economic outlook on sub-Saharan Africa on Wednesday (April 15).

Selassie’s statement follows growing speculation that the government would be forced to approach the IMF for funding, as it shut down the country for five weeks in a bid to slow the spread of the deadly virus.

Pressure

The lockdown puts SA’s fiscal position in further jeopardy as the deficit was projected to grow to 6.8% for the year to end-March 2012 before the crisis.

Despite talk that an IMF bailout was on the cards, Finance Minister Tito Mboweni has insisted that SA would not approach the lender if it had to abide by its usual conditions.

Selassie went on to say that Africa’s most industrialised country has never had issues in sourcing capital.

“You know, South Africa has always had pretty good international capital access. Over and above that though, the country’s, you know, big strength is, of course, the fact that it has very deep and liquid domestic capital markets.

“Relative to most emerging market countries, actually, it generates its financing need for the government largely domestically and [through] its own currencies.

Although the economic difficulty the country was going through prior to the crisis was not lost on Selassie, he still thinks it is relatively well-positioned to deal with it. 

“Of course, debt levels have been going up and, you know, the access to international markets right now has been disrupted for a broad suite of countries. But I think the resilience that South Africa has should see it through a while, subject to policies, of course, being recalibrated to take into account medium-term growth and sustainability considerations as soon as this crisis is behind us.”

Virtual meetup

At around the same time Selassie was addressing the media, Mboweni and South African Reserve Bank Governor Lesetja Kganyago were taking part in virtual meetings of the IMF’s advisors, the International Monetary and Financial Committee (IMFC).

In an address to the IMFC’s plenary meeting, Mboweni said that the government has been working through several scenarios to figure out how the lockdown will impact the economy.