Tito Mboweni warns that SA may lose out at Brics bank
The finance minister also cautioned that the International Monetary Fund is lurking if debt grows
SA must get its act together in planning a pipeline of infrastructure projects or it will lose out on funding from the New Development Bank, finance minister Tito Mboweni said on Thursday.
Mboweni was meeting with parliament’s finance committee to answer questions on the medium-term budget policy statement (MTBPS) he tabled on Wednesday.
He was a director of the New Development Bank, formally the Brics (Brazil, Russia, India, China and SA) development bank, for the first two years after its inception, but said he was “fired” in 2017.
“We are putting $4bn into the Brics bank, but what are we getting it for it? Everyone is taking loans, but our take-up leaves a lot to be desired,” he said.
Mboweni said that when he had served on the board of the bank, SA’s first loan application made by Eskom for grid-strengthening was derailed by allegations of corruption as the bank’s code of ethics did not allow it to invest in companies linked to corruption.
A second application for the widening of the Durban harbour was also rejected because it was over-priced by $500m.
Neither of the loan agreements has yet been signed, but Africa regional head Monale Ratsoma said in an interview earlier this month that the main obstacles to both had been cleared and it was now a matter of finalising the details.
Mboweni also warned MPs that, without intervention, SA was heading for a debt to GDP ratio of 60%, which would result in an International Monetary Fund (IMF) imposed austerity plan.
“When that happens you are close to having a discussion with the IMF and they are coming to take over your finances. When you get into a debt trap that is what is going to happen.”