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South Africa’s $ 4.3 billion emergency facility The International Monetary Fund will be released on Wednesday and the country will not start repaying the loan until 2023.

The foreign currency loan to help fight the coronavirus pandemic was approved on Monday and will be paid as a lump sum to the government’s account at central bank Montfort Mlachila, the principal resident representative of the Washington-based lender in South Africa. South said in an interview. The South African Reserve Bank is the government’s financial agent in relations with the IMF.

The facility is the country’s maximum entitlement under its Special Drawing Rights with the IMF. It is payable over 3.25 to 5 years with an interest of 1.1%. It is to be repaid in eight equal installments, the first of which is due at the end of 2023, he said.

The money comes after some senior officials in the ruling African National Congress and its alliance partners initially rejected suggestions that the government would seek help from multilateral lenders. The terms of structural adjustments attached to such loans would undermine the nation’s sovereignty, they said. However, the IMF has said emergency loans for the virus and health interventions lack the usual terms that have affected former borrowers.

“The government is completely free to use it as it sees fit,” Mlachila said. “Obviously, we would like the government to use it for appropriate purposes, including in the direct fight against Covid-19 in terms of health interventions as well as other economic measures to reduce the impact of Covid-19 on people. livelihoods of people and preserving jobs. “

Suppression of corruption

The loan comes days after President Cyril Ramaphosa said the government would crack down on corruption linked to its response to the coronavirus and ordered an investigation into the embezzlement of public funds. Nine government agencies, including the National Prosecution Authority, the police and the national tax agency, are investigating allegations of wrongdoing.

With more than 450,000 confirmed cases of Covid-19 and 7,257 deaths, South Africa is the most affected country on the continent. A lockdown aimed at curbing the spread is devastating the economy, with the government expecting it to contract 7.2% this year.

“South Africa has no outstanding IMF credit and its repayment capacity” the loan is sufficient, the government said in its letter of intent to the lender. External and public debt sustainability indicators will not change significantly as a result of the loan “and we will take all necessary measures to maintain debt sustainability”, according to the letter co-signed by Finance Minister Tito Mboweni and the governor of the central bank. Lesetja Kganyago.

An increase in virus-related spending, including a 500 billion rand ($ 30.5 billion) stimulus package, is expected to increase pressure on an already strained tax system. Public debt is expected to peak at nearly 90% of GDP in 2023-2024 and the budget deficit will hit a record high this year.

All countries receiving emergency assistance from the IMF have agreed to report their spending transparently, the lender said in a letter to the opposition Democratic Alliance.

– With the help of Paul Vecchiatto

(Updates to deaths in the seventh paragraph. A previous version of this story corrected the currency conversion in the penultimate paragraph)

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