All right we've been looking at the budget speech presented by the finance minister today before that speech the eff many of its members marched to parliament the parties saying it was marching against dangerous loans from the imf and world bank so let's look closely now at our relationship with these international lenders tonight we cross to world news correspondent nick harper who is at the head offices of the international financial institutions in washington,
Of course thank you for being with us sabir the fear in south africa has always been that we will get so deep into debt that we'll have to go with a begging bowl there will be loans from the imf or world bank with strings attached as there have been in the past we are not there yet there were some loans offered during covert 19 and those were at pretty good interest rates south africa said it was taking up on those because there were no strings attached that seemed like something good from these institutions offered to various countries around the world in that context just tell us what the role of these institutions is in the modern world,
You are right fancy yes especially in the last couple of years since the start of the pandemic the imf and the world bank have been heavily focused on providing countries like south africa with these special low interest rate loans the idea being that this money is then used by south africa to help with covert 19 economic recovery and the minister's budget is slightly different this time round to budgets that we've seen in the past because it comes after six months of lending from both the imf and the world bank the first loans that south africa has taken on since the end of apartheid in 1995 just to run you through the figures from these loans the imf has loaned south africa 4.3 billion dollars,
That happened last july and the imf has added in 750 million dollars a development policy loan they are low interest but yes there is that fear as we've seen with the protests today that south africa would be burdened by debt for many years to come we've seen in the past that when these institutions have loaned money to countries there is this long-term impact that they find it difficult and struggle over many years to repay the loans and it gets them into further financial problems even though the original idea behind these loans is to rebuild economies after problems like the pandemic the united nations for example estimates that repayments each year around the world total 210 billion dollars,
Just in interest payments not the principal repayments which are around 750 billion so yes there is this fear from south africa like you say we're not there yet but there could be a longer-term impact as it tries to repay these very substantial loans even though they're at low interest rates and that could hold back south africa in the years to come with its own recovery yeah i guess where we are right now is if we're not taking low interest loans from the imf or world bank we've got other lenders offering higher interest rates so maybe it's useful for now but the future is important,
Even though these institutions are taking a lighter touch in some senses there are still calls are they not for these bretton woods institute's institutions to transform to change absolutely and these reform calls have been going on for decades dating back several decades calling for reforms of the bretton woods institution so the imf and the world bank they were set up we have to remember more than 75 years ago at the end of the second world war back in 1944 the plan then was to rebuild the shattered global economy after the effects of that world war and it worked at the time it helped to provide the prosperity that had been lacking for many years but many critics in recent decades have said look that is the old world order things have changed dramatically,
Since then and they feel that the world bank and the imf need to keep up with those changes even the un itself that oversees these two institutions has looked at the possibility of reform it's laid out an agenda a reform plan that runs until 2030. in that 2030 agenda they call for a plan of action for the people the planet and prosperity similar to the original 1944 bretton woods plan but there is that feeling that essentially the imf and the world bank even though they're giving these loans that are meant to help with prosperity are essentially a bank and are putting countries into deeper debt and many african countries many countries around the world are burdened with mountains of debt this huge challenge to pay it back what about them right now yeah absolutely i mean especially countries that are feeling the effects of the Covid 19 pandemic that have already seen their own economies within their countries,
Let alone the impacts of the global economy really taking a toll in unemployment rising in many countries and there is this problem of trying to have a balancing act between repaying these international institutions and also rebuilding their own individual economies the minister spoke about this during his budget he laid out south africa's own debt pointing to the fact in his words he said that debt burden remains a matter of serious concern that the government will reach 4.3 trillion a trillion rand this year and there is that fear of trying to stabilize internal debt while also repaying the international institutions,
I mean really any country will have to have that balancing act between the two but i guess there is that that criticism that perhaps the world bank and the imf don't really help in the ways that they were originally set up to do so and only a saddle countries like south africa with enormous levels of debt all right nick before we let you go the south african markets looking at the budget speech today it's been called a good news budget but of course there's also the issue of russia sending troops into parts of ukraine that it's recognized as independent areas what's happening right now what's the latest from the white house,
We are expecting a fresh round of sanctions later in the day remember that on tuesday the u.s president joe biden in concert with his european allies the european union the united kingdom put out a whole range of sanctions the u.s in particular sanctioning two russian banks also saying that it would sanction oligarchs russia's elite and their families and also target russia's ability to access western financing that all happened on tuesday but president biden said that was just the first tranche that there would be more to come we are expecting potentially later on wednesday or at some point this week sanctions on the company that controls the north stream 2 pipeline,
That's the pipeline that runs from russia to germany the idea to transport gas to germany now we saw olaf schultz the chancellor of germany 24 hours ago halting final certification of that pipeline essentially putting the project on pause president biden though is expected to sanction the company that is in charge of the pipeline sanctions is that he himself blocked a year ago when he entered office,
If he lets those sanctions go ahead the thinking is
it effectively kills off that pipeline project the plan was to supply germany
with a huge amount of russian gas and make them somewhat energy reliant on
russia but president biden always said that if an invasion were to take place
that pipeline project would be taken off the table so those sanctions would
essentially draw that red line under that pipeline project killing it off for
good yeah and highlighting just how intertwined all these economies are thank
you very much world news correspondent nick harper in washington.
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