IMF recommends improving SOEs to stabilise public finances

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National Treasury has welcomed the International Monetary Fund (IMF) recommendations to improve the state-owned enterprises in efforts to contribute to the sustainability of public finances.

This follows IMF’s staff visit to South Africa from the 26th of May to the 6th of June.

The IMF staff acknowledged progress made in implementation of structural reforms and encouraged South Africa to deepen and speed up implementation of outstanding structural reforms to address the economic challenges facing the country.

These challenges include rolling blackouts. The fund says the South African Reserve Bank should continue to focus on ensuring low and sustainable inflation.

Treasury responded by saying the IMF’s concerns were broadly aligned with government plans to stimulate growth.

“Government recognises the need to address deep-rooted socioeconomic challenges, including unemployment, inequality and poverty, while stabilising government debt,” the Treasury said.

Africa’s most industrialised economy has recovered from the COVID-19 pandemic faster than some had predicted, with data on Tuesday showing first-quarter output reached pre-pandemic levels.

The IMF also pointed to a series of shocks which it said adversely affected the economic trajectory.

“The flooding in Durban, uncertainty about the war in Ukraine, tightening of global financial conditions, and China’s slowdown pose challenges to growth and price stability,” it said.

Floods in April disrupted operations at one of Africa’s busiest ports and caused billions of rands of infrastructure damage.

“Policy action needs to focus on mitigating the impact of these shocks while addressing longstanding structural economic obstacles to growth,” the fund added.

In the video below from April, the IMF called on the country to deal with Eskom’s issues: 

-Additional reporting by Reuters