IMF loans S/Africa $4.3b to cushion against COVID-19 woes

The International Monetary Fund has approved South Africa's request for a US$4.3 billion “emergency financial support” loan to ease the…

The International Monetary Fund has approved South Africa’s request for a US$4.3 billion “emergency financial support” loan to ease the country’s social and economic impact of the coronavirus pandemic.According to the IMF on Monday, South Africa was able to access the financing under the fund’s rapid financing instrument to cushion countries against the negative economic impacts of the Covid-19 pandemic.

The loan comes with very low interest rates relative to the higher borrowing costs the country would generally face.

Under the special drawing rights with the IMF, the loan would be payable over three to five years at an interest rate of just over one percent, the US-based financial body said.

This is the first time Pretoria has secured a loan from the IMF since the dawn of democracy in 1994.

More than 70 countries have received financial aid from the IMF to help them in efforts to cushion the impact of the Covid-19 pandemic, the IMF said.

The IMF’s low interest loan comes after the African Development Bank approved a US$280 million loan to South Africa last week as part of the AfDB’s Covid-19 response facility.

In addition, Pretoria recently took a US$965 million loan from the New Development Bank (NDB) to help the country in its Covid-19 Emergency Programme.

The NDB is a financial institution run by a grouping of emerging economies comprising Brazil, Russia, India, China and South Africa, which is common known as the BRICS countries.

In total, South Africa has secured financial assistance of more than US$5.3 billion from international financial institutions, according to Finance Minister Tito Mboweni.

On its part, the country has spent US$30 billion from its own financial resources to assist in mitigating the problems exposed by the pandemic, which has killed over 6,000 people since its outbreak in March this year, Mboweni revealed on Monday.