IMF says South Africa needs ambitious fiscal consolidation
The International Monetary Fund (IMF) on Wednesday said South Africa needs to pursue ambitious fiscal consolidation to restore the sustainability of its public finances.The statement follows an IMF visit to South Africa in early July to conduct a "post-financing assessment" after its US$4.3 billion loan to the country in 2020 to help it fight the impact of the Covid-19 pandemic. "Durable expenditure-based consolidation of at least 3% of gross domestic product [GDP] over the next three years is required to place debt on a sustained downward path, while protecting vulnerable groups," the IMF said.
According to the fund, South Africa's new government should build on a pre-existing reform agenda while increasing its ambition and accelerating implementation. "The new government should use the opportunity of a new mandate to implement bold reforms to address long-standing challenges and achieve the economy's full potential," it said.
South Africa's African National Congress (ANC) formed a broad coalition with several parties including the market-friendly Democratic Alliance (DA) after losing its parliamentary majority for the first time in 30 years in a May election.
The IMF highlighted rising debt, high unemployment, declining GDP per capita, inequality and poverty as some of the issues plaguing the country's economy.
South Africa's national treasury said talks with the IMF were constructive and that the government was focused on improving the fiscal position and achieving inclusive economic growth that would address poverty and inequality.
"The newly established Government of National Unity is firmly committed to addressing immediate and long-term economic challenges," it said in a statement.
-REUTERS