Speaker, the commitment that the International Monetary Fund, IMF, secured from some of its members at the G20 meeting in Mexico, in June 2012, to increase its resources by $456 billion is intended to create contingency funding in the event of further deterioration in the global economic situation. The contingency funding could be used by any of the members of the IMF to stave off the risk of another financial crisis.
South Africa's commitment to contribute $2 billion to the fund was informed by the need to promote global financial stability and prevent a downturn in the global economy which will have adverse consequences for South Africa's growth and employment prospects, given our trade and financial exposure to the Euro area and global markets. Thus, it is in our national interest to strengthen the IMF resources. The funds used for this purpose would be considered part of South Africa's foreign reserves. The funds will be invested and earn interest and would only be drawn down in emergency circumstances. If the funds are drawn down, they will ultimately be repaid, and they will continue to earn interest over this period. South Africa's commitment is intended to promote global economic policy co-ordination and co-operation.
South Africa's participation in this resourcing exercise anticipates that all quota and voting reforms agreed upon in 2010 will be implemented in a timely manner. Thus, South Africa's resource commitment is intended to promote reforms in the governance of the International Monetary Fund, in particular, and of international financial institutions in general.
South Africa's contribution was part of $75 billion committed by the Brazil, Russia, India, China, and South Africa, Brics, group and is intended to enhance peer leadership amongst this group of developing nations. The relative contributions per country are as follows: Brazil contributed $10 billion, Russia $10 billion, India $10 billion, China $43 billion, and South Africa $2 billion.
The resource commitment by South Africa and other Bric members, in anticipation of the implementation of the 2010 International Monetary Fund reform agreement, will strengthen their leadership in advocating for the reform of the governance of the IMF. I thank you for your attention.
Hon Speaker, I am standing in for hon Tshabalala on a follow-up question, but I am not going to pose a question. I would like to acknowledge the concise response that we received from the Deputy President and express our appreciation of the fact ... [Interjections.] ... that there is commitment from South Africa to ensure that there is review of the rules governing the crisis fund. We are saying this, hon Deputy President, because in the recent past, we have seen the crisis fund being used to support the banking crisis that appears on the books of developed economies as government sovereign debt. This banking crisis is as a result of a buy- in into reckless financial market speculation. As a result, we think it is in order to review this. [Interjections.]
Hon Speaker, on a point of order: The slot is for a follow-up question, not for a speech. The member is giving a speech. [Interjections.]
In terms of the Rules, a member who asks a supplementary question may make a statement or express an opinion, but may not speak for more than one minute. [Applause.] Order, hon members!
Mr Speaker, the DA supports the Deputy President's explanation of the logic behind the loan. It is important that our country joins international efforts to prevent future financial crises because those crises can have a devastating knock-on effect on us. Does the Deputy President agree that if this government had conceded to Cosatu's demand that the decision must be reversed on the grounds that "it had never been passed as ANC policy and represented South Africa's misinformed neoliberal economic policies since 1994", we would have abdicated our responsibility to global financial stability? Given that Cosatu is regarded by investors as an important partner of the governing party, how does he intend managing the risk imposed by their misguided pronouncements on international finance?
Hon Speaker, we are a democracy, and people are entitled to their opinions as long as government acts in the best interest of the country. That is what matters. Many of the investors who invest in this country, overseas investors, come from countries that have organised labour, and it is not new to them that sometimes organised labour speaks in the interest of its members in a manner that contradicts what government decides to do or a position that government decides to pursue.
We try to the best of our abilities to ensure - not only with Cosatu, but with all major stakeholders - that we consult and find consensus positions. Where, as in this case, government believes that this is the right thing to do, government does act in that fashion. Thank you.
Speaker, we accept that having joined the international financial system, we are obliged to make these types of contributions and contribute to the pool of special drawing rights. The question to the Deputy President, through you, Mr Speaker, is whether the Deputy President had an opportunity to read and apply his mind to the proposal made by the IFP quite often, lastly to the National Planning Commission, previously to Minister Patel and Minister Gordhan, for the reform of the monetary system. The Deputy President made reference to reforming the IMF, but has any thought been given by this government to the value of reforming the monetary system? For the past 100 years, the present monetary system has been based on debt-based currency rather than debt-free currency. It was established with the promise of avoiding the very type of financial crises we have had time and again at periodic cycles for the past 100 years. Is it not perhaps the case to reconsider from a South African base the need to reform the monetary system? Thank you, Mr Speaker, and I apologise for the extra few seconds used. [Time expired.]
Speaker, no, indeed I haven't applied my mind to the IFP's proposals in this regard. The reform of the monetary system would have to be initiated by the South African central bank, the Reserve Bank, or proposed to the Reserve Bank so that we can then engage in that discussion; otherwise, it has to be initiated, or you will have to approach Treasury in that regard to bring about the debate on that issue. Thank you.
Question 11 has been asked by the hon Leader of the Opposition, but before the hon the Deputy President replies to Question 11, I wish to indicate to the House that the question is on a matter that also forms the subject of a discussion tomorrow referred to as the "youth wage subsidy". Having considered the procedure regarding the application of the Rule of anticipation and recorded practice in this regard, I am satisfied that the question may be put. However, I caution members to ensure that supplementary questions and statements are limited to matters canvassed in the question, bearing in mind that the general debate is scheduled for tomorrow.
Position regarding proposed implementation of youth wage subsidy
11. The Leader of the Opposition (DA) asked the Deputy President:
(1) Whether the National Economic Development and Labour Council (Nedlac) has submitted its final proposals on the implementation of the youth wage subsidy scheme to Cabinet; if not, (a) why not and (b) what are the reasons for the continued delay; if so, when;
(2) whether the proposals will be made public; if not, why not; if so, (a) on what date and (b) what are the further relevant details;
(3) whether he, as head of the Job Creation Commission, approved the National Treasury's Model for a Youth Wage Subsidy (details furnished); if not, what is the position in this regard; if so, what are the relevant details?