How world sees SA: an IMF loan leads to talk of corruption – Wall Street Journal

When a Treasury statement announced that executive board of the International Monetary Fund had approved South Africa's request for emergency financial support under the Rapid Financing Instrument for a whopping US$4.3 billion (about R70bn) the response was what any South African might have expected: an immediate assumption that the money would be "captured". The loan is supposed help the country mitigate the adverse social and economic impact of the Covid-19 pandemic – but many citizens are not sure that that will actually happen. As the Wall Street Journal notes, President Cyril Ramaphosa's spokeswoman is taking leave of absence to allow for an investigation of two government contracts awarded to her husband to supply protective gear for health workers. And, as people are pointing out on social media, that's but one example of corruption that goes back years. – Renee Moodie.IMF grants $4.3 billion coronavirus loan to South Africa.By Gabriele Steinhauser.Johannesburg — The International Monetary Fund agreed to lend South Africa $4.3 billion, the largest loan any African country has received since the start of the coronavirus crisis, underscoring the force of the pandemic's blow to the continent's most developed economy and prompting concerns among South Africans that the funds could encourage government corruption..___STEADY_PAYWALL___.Since March, the IMF has approved more than $87.3 billion in loans to 78 countries, as it seeks to cushion the economic impact of the pandemic and ensure that governments can fortify their health systems to treat a growing wave of Covid-19 patients. South Africa is battling the biggest coronavirus outbreak in Africa, with 452,529 confirmed cases and 7,067 deaths (July 28).Read also: IMF loan terms mean SAA can't get government support – Peter LeonThe loan comes from the fund's Rapid Financing Instrument, which sidesteps a full IMF programme tied to strict economic reforms and spending cuts. Some other countries in Europe and Latin America — including Ukraine, Peru and Chile — have been awarded larger amounts, but either as precautionary credit facilities or part of a full economic-overhaul program.Sudden influx of moneyThe IMF forecasts that South Africa's economy will shrink 8% this year, the steepest contraction since the end of apartheid in 1994. Finance Minister Tito Mboweni said the IMF loans will help finance a R500 billion ($30.3 billion) stimulus package approved in April. The government has struggled to pay unemployment benefits and special grants to families hit hard by restrictions on economic activity designed to slow the spread of the virus.But the prospect of a sudden influx of money also prompted thousands of South Africans to take to social media to warn against a new round of government corruption. Allegations of inflated deals, awarded by the government as part of its coronavirus response, have made headlines in recent weeks.Shortly before the IMF loan was announced Monday night, the spokeswoman of President Cyril Ramaphosa said she was taking a leave of absence to allow for the investigation of two government contracts awarded to her husband to supply protective gear for health workers.Read also: Angry SAs speak: Will CR really clamp down on corruption?The allegations against Khusela Diko, who has denied any wrongdoing by herself or her husband, are embarrassing for Mr Ramaphosa, who has pledged to turn a new page from the scandal-hit presidency of his predecessor, Jacob Zuma.Contracts cancelledAccording to South African media reports, a company owned by Ms Diko's husband was awarded the R125 million contracts by the health department of the country's biggest province in April, days after Mr Ramaphosa announced a nationwide lockdown. The reports claimed the department paid prices above those published by South Africa's treasury for masks, sanitisers and medical-waste bags.Ms Diko has said the contracts were cancelled at her request and that no payments were made.Write to Gabriele Steinhauser at gabriele.steinhauser@wsj.com

How world sees SA: an IMF loan leads to talk of corruption – Wall Street Journal

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