IMF team concludes visit to SA

An International Monetary Fund (IMF) team led by Ana Lucía Coronel visited South Africa during November 6-21, 2019 to conduct its regular Article IV consultation activities. Discussions focused on the economic performance and outlook; policies to strengthen economic stability; and reforms to reinvigorate private investment, growth, and job creation.

Main findings of the IMF as contained in its concluding statement:

 The IMF highlights that South Africa faces three main challenges, specifically (1) weak economic growth, (2) a deteriorating fiscal situation and (3) difficulties in the operations of state owned enterprises (SOEs).

 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.

In its response, the National Treasury says it 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. ”

The Treasury adds that since the last IMF visit (27-31 May 2019), government has made progress in the following areas:

1. The new Integrated Resources Plan has been gazetted,

2. The Infrastructure Fund is being rolled out,

3. The visa regime has been greatly simplified,

4. The unabridged birth certificate requirement for young tourists has been abolished,

5. A number of industrial parks have been upgraded and approved the demarcation of more Special Economic Zones,

6. Cabinet has directed the Independent Communications Authority of South Africa (ICASA) to accelerate the licensing of high demand broadband spectrum, and

7. A new CEO for Eskom has been appointed.

“Nevertheless, economic growth continues to deteriorate, “the Treasury says.

“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.

“Fiscally, a range of expenditure reductions have been proposed to stabilise and improve government’s debt and budget deficit, the T. On the revenue side, measures have been introduced to improve the capabilities of the South African Revenue Service.”

The National Treasury says it 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.”