IMF worried about SA’s lack of urgency in economic reform
The IMF identified the energy crisis as one of the main challenges to economic growth after visiting South Africa.
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The International Monetary Fund (IMF) is worried about the lack of urgency for economic reform in South Africa, specifically regarding the increase in government debt as it curtails the state’s ability to handle economic and climate shocks.
According to the IMF’s Concluding Statement that describes the preliminary findings of IMF staff at the end of an official staff visit or mission to a member country, South Africa’s economic and social challenges are mounting, risking stagnation amid an unprecedented energy crisis, increasingly binding infrastructure and logistics bottlenecks, a less favourable external environment and climate shocks.
The IMF missions are part of regular consultations when countries want to borrow from the IMF.
The team was led by Papa N’Diaye and met with the economic authorities and other counterparts from the public and private sectors to discuss focus on policies to ensure macro-financial stability and the far-reaching reforms needed to durably lift potential growth, create jobs, reduce poverty and inequality and facilitate the transition to a greener economy.
The statement pinpoints the domestic risks that include delays in addressing the energy crisis and Eskom’s and Transnet’s operational and financial weaknesses, slower-than-expected progress or reversal in reforms and policies, including fiscal consolidation and increased political uncertainty.
Decisive implementation of structural reforms combined with fiscal consolidation would help boost private investment and ultimately employment and growth over the medium term and similarly, stronger-than-expected private sector participation in the energy sector could improve the growth outlook.
According to the statement, more reforms are needed to address South Africa’s long-standing structural impediments to growth and reforms should aim at improving energy security, fostering private investment, promoting good governance and creating jobs.
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