IMF APPROVES AN EMERGENCY LOAN OF $ 4.3 BILLION TO SOUTH AFRICA
With the world’s fifth-largest caseload, South Africa is soon to touch half a million confirmed cases of Covid-19. As other countries of the continent observe how a country of 57 billion people tackles the virus, unemployment within South Africa has shot above 30% and continues to hike. Even the major-state owned enterprises are not doing well.
In an attempt to handle the worsening situation, Africa’s most developed country for the first time has approached the International Monetary Fund (IMF) for emergency financial support. IMF has approved a loan of $ 4.3 billion to South Africa to help ease out the adverse social and economic impact. This is the largest financial support extended to any country to help moderate the adverse effects of the virus.
According to IMF, though the authorities of the country did respond swiftly to the crisis by announcing a $ 26 billion economic relief package, the country still is going through a “scary economic contraction”. The organization said on Monday (27th July), that the funds “support the authorities’ efforts in addressing the challenging health situation and severe economic impact of the Covid-19 shock”.
It further added that this extended support will also help to shape a new economy and lessen the harm that may occur in the future. For the organization, it’s not the pandemic that needs to be fought off, but also the aftershock that comes after it.
As the IMF said, “once the pandemic is behind, there is a pressing need to ensure debt sustainability and implement structural reforms to support the recovery and achieve sustainable and inclusive growth.”
IMF’s loan is a low-interest loan that will contribute to the government’s relief package. Since it has been sanctioned under the Rapid Financing Instrument (RFI), there is no need for the country to conform to terms that come associated with IMF lending facilities. Thus, South Africa is the sole judge of what’s the best way to bring up the economy and those affected by the crisis.
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