South African Minister Defends $2-billion IMF Loan

Republic of South Africa Minister of Internaltional Relations and Cooperation Maite Nkoana-Mashabane has defended the loaning of $2 billion to the IMF. The minister says it is a comittment made by the BRICS countries., a photo by Pan-African News Wire File Photos on Flickr.

Minister defends South Africa's $2-billion IMF loan

25 Jun 2012 17:51
Gillian Jones
South African Mail & Guardian

International Relations Minister Maite Nkoane-Mashabane says South Africa's $2-billion loan to the IMF will help the country gain influence.

“This pledge by Brics countries is in line with the provision to transform institutions of global governance,” she told the ANC Progressive Business Forum Brics colloquium, ahead of the party’s four-day policy conference in Midrand.

“It has been a tradition ... that decisions in international financial institutions are made and influenced by countries with strong financial muscles.

“In this regard the more we contribute financial resources to such institutions, the better the chance and prospects for us as a country to influence decisions.”

President Jacob Zuma made the commitment of $2-billion to the International Monetary Fund at the G20 summit, a meeting of the world’s greatest economies, in Los Cabos, Mexico, last week.

The money would be loaned for an IMF “firewall” meant to prevent future financial crises.

Cosatu and the ANC Youth League, among others, criticised the move, saying the money could have been better spent on domestic problems.

Emerging markets

In total, the members of Brics - Brazil, Russia, India, China and South Africa - had contributed $75-billion to the IMF fund.

“The Brics pledges were contingent on the completion of the quota review to ... better reflect the relative weights of IMF members in the world economy,” Nkoane-Mashabane said.

The countries’ weighting had changed given the strong GDP growth in emerging markets and developing countries, she said.

The minister said it was time South Africans took advantage of the Brics membership.

“We should stop asking the question now as to what the hell is South Africa doing in Brics,” she said.

“We should now be focusing on what should business be doing to take advantage of South Africa’s membership in Brics, and opportunities abound.”

Earlier, ANC treasurer general Mathews Phosa echoed her sentiments to the business colloquium.

Private sector

“Whenever our leaders sit ... and sign agreements ... it becomes important that we as private sector should make follow ups, should network, should do the deals.”

He called for emerging markets to determine their own futures and set up their own institutions.

“[There] is a growing view that emerging economies should shape their own future, create their own institutions.”

This would be fleshed out at the colloquium and over the next few days at the policy conference.

He said Brics was a “major force to be reckoned with”.

The Brics grouping accounts for more than 40% of the world gross domestic product.

The ANC policy conference would debate and decide new policies. These would then be confirmed at the party’s elective conference in Mangaung in December. - Sapa