The South African Communist Party (SACP) has voiced its displeasure regarding the decision by the National Treasury to source a new R28 billion loan from the World Bank.
The communist party says the decision deepens the country’s subordination to imperialist-controlled global finance capital, reinforcing a neo-colonial debt regime that erodes national sovereignty, undermines democratic development and threatens the interests of the working class.
The party was reacting to reports that despite the country being knee deep in foreign and domestic debt, it still went out and borrowed more.
The communist party said the foreign currency denominated debt exposes South Africa to external shocks over which the country has no control because when the rand depreciates, the cost of repaying these loans soars, draining public finances.
Furthermore, it accused the National Treasury of using this to entrench austerity by presenting itself and the budgets it tables annually in parliament as concerned about the debt-to-GDP ratio, while its accumulation of foreign currency-denominated debt, instead of sustainable and development-oriented debt in rand, exposes South Africa to severer debt conditions.
“Even though our economy is based on rands, imperialist-controlled foreign currency-denominated debt must be serviced in imperialist-controlled currency, which is governed by imperialist-controlled monetary policy, with all the domestic currency exposure to the risk of depreciation.
“What makes the National Treasury’s obsession with imperialist-controlled foreign currency debt accumulation even more problematic is the fact that South Africa has deep domestic capital pools. These could and should be harnessed to fund public infrastructure and state-led development,” the party said.
It added that historically, dating back at least to the 1970s, the regime of International Monetary Fund (IMF) and World Bank loans – especially through their conditionalities – has undermined domestic economic policy sovereignty in many Global South countries.
“In nearly every case where domestic economic policy has been shaped by IMF and World Bank conditionalities or associated policy measures, underdevelopment has persisted. Large sections of the population in these countries continue to live in conditions of poverty, mass unemployment, and widening domestic and global inequality.
“Through their loan conditionalities, among others, the IMF and World Bank have functioned as instruments of the imperialist regime, enforcing neo-liberal policy prescriptions. Where their loans are involved, the agenda is, more often than not, a neo-liberal one.”
