{"id":228274,"date":"2022-06-08T10:26:08","date_gmt":"2022-06-08T08:26:08","guid":{"rendered":"https:\/\/www.myza.co.za\/treasury-notes-imf-sa-economy-assessment\/"},"modified":"2022-06-08T10:26:08","modified_gmt":"2022-06-08T08:26:08","slug":"treasury-notes-imf-sa-economy-assessment","status":"publish","type":"post","link":"https:\/\/www.myza.co.za\/press\/treasury-notes-imf-sa-economy-assessment\/","title":{"rendered":"Treasury notes IMF SA economy assessment"},"content":{"rendered":"
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Government recognises the need to address deep-rooted socio-economic challenges, including unemployment, inequality, and poverty, while stabilising government debt.<\/p>\n

The comment was made by the National Treasury in response to an International Monetary Fund (IMF) assessment of the country\u2019s economy.<\/p>\n

From 26 May – 6 June, IMF staff held meetings with South Africa as part of their routine economic surveillance function, as prescribed in the IMF\u2019s Articles of Agreement.<\/p>\n

Economic developments in the country were under discussion during the meetings with IMF staff, government, the South African Reserve Bank, state-owned enterprises (SOEs), business and academia.<\/p>\n

The visit by IMF staff did not result in a board discussion or publication of a report on South Africa\u2019s economy, said Treasury in a statement.<\/p>\n

In its findings, the IMF was of the view that South Africa\u2019s economic recovery from the COVID-19 pandemic should continue this year as some sectors such as tourism, hospitality and construction, gradually improve.<\/p>\n

The staff noted that South Africa was benefiting from favourable commodity prices, which had raised exports.<\/p>\n

Nonetheless, the IMF pointed to various shocks that continue to affect the country\u2019s economic outlook. These include the KwaZulu-Natal floods, uncertainty arising from the conflict in Ukraine, tightening of global financial conditions and lower economic growth in China.<\/p>\n

\u201cThe IMF staff acknowledges progress made in implementing structural reforms and encouraged South Africa to deepen and speed up implementation of structural reforms to address a number of obstacles.<\/p>\n

Areas needing urgent attention include growth, load shedding, and addressing deficiencies in the transportation system, which limit the benefits from the higher commodity prices,\u201d said Treasury.<\/p>\n

Other key reform areas highlighted include improving procurement processes, transforming network industries, fostering competition to attract private investment; and advancing the functioning of the labour market.<\/p>\n

In addition, IMF staff underscored that operations, finances and governance of Eskom and Transnet should be improved to contribute to the sustainability of public finances.<\/p>\n

\u201cThe staff emphasised the need to implement growth-friendly fiscal consolidation to ensure that the country\u2019s debt as a percentage of GDP is on a declining and sustainable path. Containment of compensation costs and streamlining transfers to SOEs were some of the recommendations tabled.<\/p>\n

\u201cIn addition, the staff underscored that operations, finances and governance of Eskom and Transnet should be improved to contribute to the sustainability of public finances,\u201d read the statement.<\/p>\n

Economic recovery<\/strong><\/p>\n

Responding to this, Treasury said government\u2019s steadfast commitment to restoring sustainability to public finances was supported by better than expected revenue collection, albeit temporary, and fiscal restraint.<\/p>\n

\u201cAs stated in the 2022 Budget, government is using a portion of the additional revenue to reduce the fiscal deficit and stabilise debt, with the majority targeted to address urgent social needs, promote job creation through the presidential employment initiative, and support the public health sector,\u201d it said.<\/p>\n

It said there was faster implementation of economic and SOE reforms, accompanied by fiscal consolidation to provide a stable foundation for growth, easing of investor concerns, and support a faster recovery and higher levels of economic growth.<\/p>\n

The National Treasury acknowledged that South Africa\u2019s economic recovery had been \u201cuneven\u201d and that \u201crisks remain high\u201d.<\/p>\n

In general, it said, the IMF\u2019s concerns were aligned with government\u2019s response programme to stimulate economic growth, which was guided by South Africa\u2019s Economic Reconstruction and Recovery Plan (ERRP) as well as commitment towards growth and fiscal sustainability.<\/p>\n

On fiscal risks posed by some SOEs, the department said the Presidential State-Owned Enterprises Council was considering their value add and which SOEs would be rationalised or consolidated to reduce their continuing demand on South Africa\u2019s public resources.<\/p>\n

\u201cThe National Treasury is working on a sustainable solution to deal with Eskom\u2019s debt in a manner that is equitable and fair to all stakeholders. Any solution will be contingent on continued progress to reform South Africa\u2019s electricity sector and Eskom\u2019s own progress on its turnaround plan and its restructuring,\u201d it said.<\/p>\n

Structural reforms<\/strong><\/p>\n

Treasury said it remains committed to fast-tracking structural reforms to foster job-led growth, as supported through Operation Vulindlela.<\/p>\n

In this regard, 26 structural reforms were prioritised. Of these, eight reforms had been completed while another 11 are progressing well.<\/p>\n

Key achievements to include:<\/p>\n