The International Monetary Fund (IMF) said it had become more apparent than ever that South Africa would encounter more economic turbulence in 2018, despite the global recovery recorded during the past year.
The IMF, which sent a delegation to South Africa this week, explained that the outlook had been “challenging” for 2017 and 2018.
The international body said the lack of critical reforms in South Africa had played a significant role in creating the current circumstances.
The IMF conclusions were made following visits to the South African Reserve Bank, State Owned Enterprises and local business.
“The implementation of some key reforms have stalled, and many state-owned enterprises, which are engines of growth, remain inefficient,” read a statement released by the IMF this week.
“An accelerated pace of implementing structural reforms could prompt a recovery in business and consumer confidence, which could improve economic growth,” continued the statement.
The jury is out on whether South Africa will implement those reforms though, as the country continues to grapple with political uncertainty. The governing African National Congress holds its 54th National Conference this December, which will represent a changing of the guard in the party.
The policy direction of the ANC could drift dramatically during this transition. More significantly, perhaps, the conference could spark a split in the organisation that will be impossible to repair. That could have significant ramifications for the ANC and the country.
“The IMF welcomed the role of the Presidential Fiscal Committee (PFC), which signals the political will to tackle long-standing reforms and remove obstacles to investment, which will unlock the economy’s growth potential,” said a hopeful IMF.
Despite what is otherwise a bleak outlook, there are also some encouraging signs for the IMF, based on what the South African government says that it is doing.
“The National Treasury appreciates the IMF’s findings and the urgency it places on the implementation of structural reforms to reignite growth. The messages signal to the difficult period ahead, where decisive actions to grow the economy and create the much needed jobs are required,” said Treasury this week.
“It is for this reason that government has, in recent days, been hard at work through the PFC to finalise measures to preserve fiscal discipline and debt sustainability, as well as measures to support growth. Details will be communicated at the appropriate time.”