Is Zuma’s R16.6b IMF donation/loan a sign of a loss of touch with SA reality?

There are some economists who claim South Africa’s “firewall fund” contribution to International Monetary Fund sends the “right signals” to its “trade partners in Europe, and [that it] will stimulate local manufacturing, according to The Times report today.

National Treasury spokesman Jabulani Sikhakhane said this was a backup in the event of further deterioration in the Eurozone. Sikhakhane said the R16.6b contribution could be drawn as necessary from foreign reserves. Sikhakhane said “global growth has slowed, and unemployment is rising. The resources could be used by all members of the IMF to stave off the risk of another financial crisis, which would probably lead to a sharp global slowdown”.

He was supported by many economists. Econometrix economist Manqoba Madinane said this was in SA’s best interest, given that the eurozone accounted for 33% of its net trade. “We have very large exposure to the European Union. I think this is an important signal that we are willing to help”.

Chief economist of FNB Cees Bruggemans said South Africahad $50-billion in foreign reserves and could afford a $2-billion contribution to fulfil its global obligations. Also quoted in The Times report is economist Dawie Roodt who said SA’s contribution would have minimal impact on the local economy because the reserve fund, which is used to buy US treasury bonds, would simply be lent to the IMF.

Roodt said our concerns as South Africans on why Zuma et al made such a huge contribution at the back of service delivery protests, escalating youth unemployment, poverty and skyrocketting public sector salary demands was just ridiculous (my emphasis). He said the contribution was a “good political gesture” and that (we) “the public does not need to be concerned because the money will be taken from reserves that the Reserve Bank normally uses to buy US treasury bonds”. This, he said, was because the money would only be “lent to the IMF and probably earn better returns”.

Labour federation Cosatu condemned the move. Its spokesperson Patrick Craven said the country is one of the “most distressed economies in the world, with massive levels of unemployment, poverty and inequality… and should therefore be a beneficiary rather than a contributor to such a fund. He called this an “attempt to show international institutions and big powers thatSouth Africa is one of the ‘good boys’.”

Craven said the assumption that South Africa was a developed country had resulted in the “already high levels of unemployment, poverty and inequality have become even worse, with massive job losses, especially in the key manufacturing sectors.” He said the contribution should be reversed and that, instead, it should be used to “alleviate the plight of the poorest South Africans and to invest in the restructuring of our economy”.

Despite our (citizens’) criticism of the donation to IMF and Cosatu’s call for it to be reversed – it appears Business Unity of South Africa is having none of that. Busa said yesterday that the contribution was a sensible investment.

Busa deputy CEO Raymond Parsons said the loan “only represents about four percent ofSouth Africa’s forex and is a loan on which the country will earn a return and which will eventually be repaid. Parsons said: “It is also inevitable, if South Africa is to enlarge its influence in global agenda-setting structures like the G20, BRICS and the IMF, that it be seen to be making an additional financial commitment at this critical juncture in world economic affairs.

Responding to criticism, the ruling ANC spokesperson said in a statement today that the donation was an “initiative to prevent global economic crisis that is threatening the world economy”. As a member of both the United Nations and G20, the Mthembu said SA had “an obligation to join hands with the rest of the world in averting a repeat of the last global economic melt down in the 2008-2010”. Mthembu said “our contribution together with the rest of the world countries will enable the IMF to intervene decisively using, the Crisis Fund that has been established, in the imminent threat to the world economy”.

Sikhakana and the Presidency spokesperson Mac Maharaj maintained that the funds “would be considered part of South Africa’s foreign reserves”. He said it “will be drawn down only if they are needed and only after other resources have been depleted. The funds will be invested and earn interest.”

Govt. cannot afford R30b wage increases?

What is further shocking here is that this contribution to IMF is followed by the newly appointed Public Service Administration minister Lindiwe Sisulu who said the very same Treasure had only budgeted 5% for the public sector salary increase. Sisulu said the public sector salary demands would cost the state R30b, about R8.1b than what had been budgeted for. This after both state and the union representing the department employees deadlocked last week over wage demands.

Sisulu claimed the demands were unsustainable – like the salary former Bafana Bafana coach which has since been slashed because it is ‘unsustainable’ – and that government was in a situation where nine percent (one of the union demands) is way above what it has budgeted for”. She, however, maintained that it would be in the “interest [of all parties] that we find an amicable solution.

It is disingenuous of Sisulu to claim “we cannot go on like this with a wage bill that is unaffordable”, and that “after a series of negotiations we are at a point where we can influence and talk to labour so that we can find each other”. Why dare raise state’s unaffordability of union demands when the same issue was not raised when cabinet minister get a hell lot more than the union is demanding?

And how on earth does she plan to help the union and state to “find each other” when there is such a huge wage gap between what they (as cabinet members) are getting and what lower-level workers (in municipalities) are getting?

And how will this “find(ing) each other” happen especially when they cost of living has now gone up, with petrol prices on the rise every now and then which, at the end, affect these poorly paid workers many of whom are commuters?

Anger over Razzmatazz’s R17m for Beyonce

Another thing that makes people sooooo angry are reports – although denied – that Sport Minister Fikile Mbalula will pay (from the department’s budget, it seems) R17m to have the beautiful Beyonce performing at this year’ SA Sports Awards.

Denying the reports, department of sport director-general Alec Moemi told South Africa Press Association on yesterday that the reports were a “fabrication”, that “No contract for R17-million has been signed”. Moemi said the department “will not endorse such a thing. But if other people pay for it and it is in line with our mandate, we are happy.”

He said: “If we can get Beyonce without paying for Beyonce, we’d be very keen. It’s a lie to say we are paying for it. Sponsors would pay for it. The base cost of the awards is ours.”

The rumours, expectedly, irked a hell lot of SA musos and artists who took to Twitter. These, among others, include actress Florence Masebe, singers Kabomo, Sibongile Khumalo, Arthur Mafokate. Even Cosatu general-secretary Zwelinzima Vavi expressed his concern (were the rumours to be true), saying: “Example of an own goal. Mr Mbalula paying Beyonce R17-million for an hour’s work when we have artists in SA?”

Mbalula is known to go all out especially when it comes to American musos and artists. During last year awards held atSun Cityin Rustenburg, he apparently invited US R&B star Brandy Norwood and actresses Regina King and Vivica A Fox to perform and present awards. He later invitedNorwoodback with her brother Ray J and Keri Hilson for his 40th birthday bash in October lat year.

According The Times, Razzzmatazz had during the launch of his Fikile Mbalula Foundation on June 28 last year invited Diary of a Mad Black Woman actress Kimberly Elise, Think Like a Man’s Regina Hall, Sanna Lathan (The Cleveland Show), Victoria’s Secret model Selita Ebanks and even Christine Teigen, who is engaged to US singer John Legend. 

R11m for cars, not service delivery

Just when you thought enough is enough – then surface reports that one of theKwaZulu-Natal municipalities had spend R11m on luxury cars over the past five years but had failed to buy office stuff which then forced its employees to bring their own toilet papers.

Umgungundlovu district municipality confirmed hiring 57 cars, including Mercedes Benzes, 4x4s and single-cab bakkies, from May 2007 to May this year. DA caucus leader Sizwe Mchunu said “It is difficult to comprehend how a municipality that is failing to provide proper service delivery to its people can justify spending this kind of money on car hire”.

And The Presidency’s R28m unauthorised expenditure? 

President Jacob Zuma’s office has also been criticised for what is seen as uneccesary and unauthorised expenditure of R28 million by Parliament’s finance watchdog, Scopa. Scopa chairperson Themba Godi reportedly criticised Zuma’s office, saying: “I think we are making heavy weather of what was supposed to be a very simple process”.

The Presidency claimed the expenditure was “unavoidable” – something some MPs did not fall for. These included legal fees at R11.4-million; communications services that cost R7.5 million; additional staff at almost R1-million; and advertising that cost just more than R500000.

Given all this – and many other fruitless and unecessary expenditure (not forgetting the donation to Swaziland) – is one inclined to conclude Zuma and his national and provincial government departments have lost touch with the South African reality at the grassroots level?

One thought on “Is Zuma’s R16.6b IMF donation/loan a sign of a loss of touch with SA reality?

  1. Crap logic if there is such anyway. They must think we are stupid. Apart from the R16.1bn donation to IMF, the R17mil Mbalula wants to spend on Beyonce, the e-toll that they want us finance, the refusal to adequately compensate public servants and the list is endless. what do they take us for?

    They pay economists to justify their actions. This is an insult to our intelligence.

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