The International Monetary Fund (IMF) has approved South Africa’s request for emergency financial support to mitigate the social and economic impact of the coronavirus pandemic.
The low interest loan is worth around R70.6 billion ($4.3 billion).
This comes after the African Development Bank last week approved a R4.7 billion loan to South Africa as part of its COVID-19 response facility, while the New Development Bank approved about R16.4 billion loan as part of its COVID-19 Emergency Programme.
According to the IMF, under its rapid financing instrument due to the COVID-19 pandemic, South Africa was able to access the financing at very low interest rates relative to the higher borrowing costs the country would generally face.
This is the first time Pretoria has sought a loan from the IMF since the dawn of democracy in 1994. According to Bloomberg, under the special drawing rights with the IMF, the loan would be payable over three to five years at an interest rate of just over 1%.
More than 70 countries have received financial assistance from the IMF to help in efforts to cushion the impact of the COVID-19 pandemic.
In total, South Africa has secured financial assistance of more than R90 billion from international financial institutions.
Finance Minister Tito Mboweni says South Africa’s Reserve Bank has also played an important role in reducing interest rates by a total of 300 basis points as consumers and businesses feel the severe economic effects of the coronavirus lockdown.
The Finance Minister says government’s COVID 19 support package totalling R500 billion has been directed straight at the problems exposed by the coronavirus.
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