SOVEREIGN DEBT: SA’s REPAYMENT CAPACITY ‘ADEQUATE’ – IMF

SOVEREIGN DEBT: SA’s REPAYMENT CAPACITY ‘ADEQUATE’ – IMF

• 05 September 2024
• National Treasury
• SA Legal Academy

South Africa has ‘adequate’ capacity to repay the USD 4.3bn IMF loan sought in July 2020 to address ‘the aftermath of the COVID-19 pandemic’. This is according to a National Treasury media statement on the outcome of a recent IMF post-financing assessment visit.

Outlining IMF findings and recommendations, the statement says nothing new. Apparently, in the IMF’s view, although South Africa’s economy ‘has shown resilience in the face of disruptions’, living standards continue to be at risk of ‘further erosion’ in the face of ‘persistent structural challenges’. National Treasury’s response is also typical of what has come to be expected after such visits, with the usual upbeat list of reforms, accomplishments and policy commitments.

The IMF report itself is more brutal, among other things blaming the ‘significant macroeconomic challenges’ resulting from a decade of ever-declining real per-capita GDP on:

• ‘weak policies’
• ‘an inability to address entrenched structural rigidities’, and
• ‘governance weaknesses that undermined key sectors of activity (electricity, logistics)’.

According to the report, the government of national unity ‘should use the opportunity of a new mandate to implement bold reforms to address long-standing challenges and achieve the economy’s full potential. … This requires determined structural and fiscal reforms, complemented by prudent monetary and financial policies. The new administration should build on the existing reform agenda but increase its ambition and accelerate implementation to put the economy on a permanently higher and more inclusive growth path’.

• National Treasury media statement
• IMF report

Published by SA Legal Academy Policy Watch

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