(Parliamentary debate on ending IMF and World Bank loans)
South Africa must stop living beyond its means and making more debt than it is able to repay.
The South African government's debt burden is too great and poses a significant risk to the sustainability of public finances. The costs related to the interest on government debt is pushing South Africa closer and closer to the edge of fiscal ruin.
Government debt ought to be managed by means of reforms that will stimulate economic growth, cutbacks to public expenditure, downscaling state-owned enterprises and the eradication of corruption.
The former Minister of Finance, Tito Mboweni, admitted outright that South Africa has accrued too much debt and that the Covid-19 pandemic made matters even worse. Out of every rand of tax that South Africans paid in 2020, 21 cents went towards paying interest on government debt.
In June 2020, South Africa received a Covid-19 emergency loan of $1 billion from the New Development Bank, the multilateral development bank that was established by the BRICS states.
There were more loans from the World Bank and the Africa Development Bank as well.
The government had committed itself to managing the Covid-19 financial aid received from the International Monetary Fund (IMF) with the greatest transparency and accountability, and the loan was awarded based on the former Minister of Finance's aspirations to implement reforms and manage the economy better.
The IMF had been under the impression that the public procurement system was upgraded to address the shortfalls that had allowed state capture to occur.
And yet there are countless allegations of fraud and the misuse of funds in procurement processes relating to the pandemic.
There was an entire parade of ANC supporters and cadres who benefited from Covid-19-related procurements and contracts. It is clear that President Cyril Ramaphosa is unable to effectively address institutional corruption.
Thus, any fears that the same may happen to any new loans that the government makes – and that must be financed and repaid with hard-earned tax money – are quite justified.
South Africa's dire financial situation can only be turned around through sustainable economic growth and fiscal discipline.
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