The Democratic Alliance (DA) has written to the Executive Director of the International Monetary Fund (IMF), Kristalina Georgieva, to draw the Fund’s attention to the government’s decision to proceed with a further R10.5 billion bailout for South African Airways (SAA). This decision runs counter to the commitments the government made in its Letter of Intent (LOI) sent to the Fund to secure the $4.3 billion loan. We request that the Fund trigger its funding requirement for ‘full transparency and accountability’ on the Rapid Financing Instrument (RFI) loan it extended to South Africa.
We have brought to the attention of Fund the Minister of Finance, Tito Mboweni’s intentions to extend this immoral bailout to the country’s mothballed national carrier and have asked that the IMF request that the South African government gives an update on how emergency funds have been spent.
The Minister’s LOI clearly stated that emergency funding from the IMF would be used to support health and frontline services, solve the balance of payments problems caused by the pandemic, protect the vulnerable, support economic reform, drive job creation and stabilise public debt.
Now it seems likely that the SAA bailout will be funded by cutting Covid stimulus expenditure earmarked for public employment programmes and for rail infrastructure.
The DA argues that this is a deviation from the commitments Minister Mboweni made in the LOI, and it critically undermines the credibility of the government’s economic reform promises.
Seeing that the Minister now clearly intends to dishonour his commitments with this SAA bailout, the DA believes that the IMF should trigger the accountability requirement for the RFI funding instrument without delay.