Bank loan

World Bank loan: MEPs denounce “reckless borrowing”

Members of Parliament (MPs) rejected the 11 billion rand from the Treasury world Bank loan, saying it was unaffordable for an over-indebted country.

Briefing of MPs on the loan on Tuesday, Enoch Godongwana, Minister of Finance said the government regularly seeks loans and that the World Bank gave it a loan for policy development.

“Given its terms and conditions, which seemed acceptable to us, compared to what is available on the market, we opted for the loan from the World Bank,” he said.

However, MPs criticized the government, accusing it of sending confusing messages about where the money is going.

“When they first talked about getting the loan, they said it was for welfare. Yesterday the minister told us it was for policy making. The Treasury and the minister can’t or won’t tell us what the loan is actually for,’ said DA MP Deon George and member of Parliament’s Finance Committee. 702.

It looked like the money would be used for government seen fit, he added.

“It will increase the level of debt. This dollar loan will have to be paid in dollars. We all know the government has mismanaged our money…we don’t think South Africa needs this loan.

“If it weren’t for the corruption and if we didn’t have to bail out state-owned companies, we wouldn’t be here.”

ALSO READ: EFF calls for urgent meeting with Godongwana over World Bank loan

Although South Africa’s national debt stands at 3.4 trillion rand, there was still no clear plan for managing the Treasury’s debt, said committee chairman Joe Maswanganyi.

“It’s reckless borrowing. We all have bank accounts and should know that if you borrow like this, if you die, that debt will have to be repaid by your children and grandchildren, and will impact generations to come. .

“We have a debt to GDP problem as we speak,” Maswanganyi told the radio station.

He noted that debt was the country’s third fastest growing service expenditure, after education and social development.

Maswanganyi said the committee would be ready to question government borrowing and debt after Godongwana delivers his first budget speech on Feb. 23.

“We have been tackling this debt problem for some time now. The committee in 2018 made resolutions on how debts should be managed, which were adopted by the National Assembly on Debt.

“The minister will appear before the committee the next day and will have to speak on the debt and more particularly on this 11 billion rands that they obtained.

The Economic Freedom Fighters (EFF) on Tuesday called for an urgent meeting with Godongwana.

The party wants the finance minister to clarify the terms and conditions of the loan.

“EFF rejects with contempt the irrational and senseless World Bank loan of R11 billion to South Africa. This will only lead to future subservience to the control and ownership of rating agencies, financiers and the Washington Consensus,” the EFF said in a statement. declaration.

George said the National Assembly should reject Godongwana’s next budget.

“Parliament should reject this budget because what it will contain is interest rate inflation due to additional debt.

“What we should be saying is that the government needs to cap the debt and start managing it effectively.”

NOW READ: R11bn World Bank loan poses ‘risk of theft’ in South Africa, expert warns

Compiled by Getrude Makhafola.