The pandemic has forced the ruling African National Congress to end its long-held resistance to borrowing from the IMF and the National Treasury requested assistance to cover virus-related spending at the end of April. The $4.2 billion loan is the country’s maximum entitlement under its special drawing rights with the lender and would be payable over 3.25 to five years at an interest rate of just over 1%.
While there have been “protracted negotiations” with the lender, South Africa believes it has reached a common understanding and expects the IMF’s local staff to make a submission on the request to the executive board early next month, Finance Minister Tito Mboweni said last weak after presenting a special adjustment budget that accounts for the damage wrought by the virus.
Africa’s most-industrialized economy is counting on $7 billion from multilateral lenders and development finance institutions to support its response to the pandemic. The New Development Bank, which serves the BRICS nations, has approved a $1 billion facility and the country plans to ask the World Bank for up to $2 billion, according to Dondo Mogajane, the National Treasury’s director-general.