An authorising special resolution by the National Assembly is needed

Your report on the large R27bn IMF loan apparently secured by the government refers (“David Masondo defends R27bn World Bank loan”, June 24).

According to the report, the EFF has objected to the loan and has written to National Assembly speaker Thoko Didiza to introduce amendments to the Public Finance Management Act of 1999.

“These amendments will place strict limits on the executive’s borrowing powers, particularly those of the minister of finance, by requiring prior approval of all foreign loans by parliament”, according to the tenor of the EFF objection.

The Public Finance Management Act has been the applicable law since it took effect on April 1 2000, long before the EFF was established. It contains a provision in section 71 that requires a “special resolution” of the National Assembly for any foreign loan such as what the government has in mind with the IMF to be validly negotiated.

It would appear, given the EFF’s seemingly impotent objection to the loan and its request for remedial legislation, that no such special resolution has been adopted by parliament. If it is so that there is no special resolution, then there is no valid loan, and the EFF’s objection is far from impotent.

Remedial legislative amendments are not required — an authorising special resolution by the National Assembly is what is needed if the intended offshore loan from the IMF is to be consummated.

Paul Hoffman, SC
Director, Accountability Now