(Photo by GIANLUIGI GUERCIA / AFP)
National Treasury and The International Monetary Fund (IMF) find that South Africa’s largest risk is Eskom, and weak economic growth.
(Photo by GIANLUIGI GUERCIA / AFP)
In a press statement released by the National Treasury on Monday 25 November 2019, The International Monetary Fund (IMF) concluded after a visit to South Africa, that the country’s largest economic risk is Eskom, among other challenges like weak economic growth.
The IMF visited South Africa from 6 to 21 November 2019 to discuss economic and financial developments in the country. This visit takes place twice a year as part of their surveillance function.
The IMF staff met with government, the South African Reserve Bank, state-owned enterprises (SOEs), business, organised labour, and academia.
The more detailed IMF Article IV Report on South Africa will be finalised by the IMF post consultations and considered by the IMF Executive Board in early 2020.
The IMF highlights that South Africa faces three main challenges:
The IMF recommends that South Africa creates an environment conducive for private sector investment and takes a decisive approach to implement structural reforms in order to boost economic growth.
The National Treasury notes the contents of the IMF Staff Concluding Statement following the Article IV consultation, as well as the key risks identified and proposed policy recommendations.
These are in line with areas that the South African government is working on, to stimulate economic growth, improve the overall fiscal position and address inefficiencies in SOEs.
Since the last IMF visit from 27 to 31 May 2019, the government has made progress in the following areas:
According to the press statement from the National Treasury, the country’s largest economic risk is Eskom. Government has announced a comprehensive set of structural reforms to support the energy sector and more specifically, Eskom.
A range of expenditure reductions have been proposed to stabilise and improve the government’s debt and budget deficit, while measures have also been introduced to improve the capabilities of the South African Revenue Service (SARS).
“The National Treasury remains committed to achieving inclusive growth that will create jobs, eradicate poverty and reduce inequality. The discussion paper released by the department has proposed a number of economic reforms that can boost GDP growth over the medium and longer term, and support increased investment and job creation,” said National Treasury.