The International Monetary Fund (IMF) has issued a warning to South Africa, saying that a reform plan needs to be implemented soon in order to restore confidence in the economy.
“Early announcement and timely implementation of a strong adjustment and reform plan is now a priority to restore investor and consumer confidence,” the IMF said in a statement issued on Wednesday.
It issued a bleak warning for the country’s economic outlook, saying that increasing local political uncertainty and delayed reforms were harbingers of a challenging economic outlook.
“IMF staff anticipates that the subdued economic growth of 0.7 percent, projected by the authorities for 2017, is not likely to improve much in 2018,” the statement warned.
The statement was issued at the conclusion of a visit by IMF staff to South Africa, which ran from October 30 to November 8.
The visit was a chance for the IMF to discuss “recent economic developments and outlook in the context of its regular surveillance activities”.
The IMF further warned that growth would only recover gradually in the medium term “unless the pace of implementation of structural reforms accelerates quickly enough to prompt a clear recovery in business and consumer confidence”.
“Against current structural constraints, the envisaged growth upturn would be insufficient to reverse the ongoing decline in per-capita income and generate enough jobs to absorb the growing labour force. Downside risks to the outlook relate to worsening perceptions of weak governance; tightening global financial conditions, and slowing trading partner growth,” the statement said.
The team urged the Presidential Fiscal Committee to “approve fiscal measures in a timely fashion to avoid undue increases in debt-to-GDP ratio”.
The IMF’s mission to South Africa was led by Ana Lucia Coronel.