South Africa is the latest country to receive monetary support from the International Monetary Fund (IMF). IMF released funds worth $4.3 billion as an emergency assistance to combat Covid-19 crisis, media reports said.
Geoffrey Okamoto, the IMF board’s chair and first deputy managing director, told the media, ”A deep economic recession is unfolding as the decline in domestic activity and disruptions in the global supply chain resulting from the Covid-19 shock have added to a pre-existing situation of structural constraints, subdued growth, and deteriorating social outcomes.”
According to the IMF, the loan is categorised under its ‘rapid financing instrument’. It has replaced the old programmes which focused on assisted nations when in the wake of any natural disaster or crisis related to war. The fund will help the balance of payment of the country to remain afloat during the Covid-19 outbreak.
Mr. Okamoto also thanked the government and the central bank for their quick response towards the emergency fund release. He also stated that there may be a need for deeper reform in future.
It is reported that the government of South Africa’s first IMF fund support seems to be little controversial within its own party. The current Covid-19 crisis in the country is a red alert for the government in implementing reformation efforts to achieve sustainable and inclusive growth.
“Efforts to preserve the central bank’s inflation mandate and proactive bank regulation and supervision, particularly for small banks, will also be important.” Mr. Okamoto added.