Pretoria – The South African government has acknowledged the ongoing work done by the International Monetary Fund (IMF) to support global growth and ensure stability of the international monetary and financial system.
This following the IMF findings on Tuesday that growth and job creation in South Africa remain lacklustre.
Government has acknowledged that there are domestic factors that are constraints to Gross Domestic Product (GDP) growth and is working at addressing them in its programmes.
However, the National Treasury said the IMF also stated that external vulnerability has declined somewhat.
According to the Treasury, many of the risks that have been identified by the IMF are addressed in government’s National Development Plan (NDP), which reflects efforts to address growth and redistribution, expanding output and incomes and build a more inclusive and equal society.
The findings comes from IMF’s staff visit to South Africa from 1 to 9 June. The IMF published its findings today.
“The Fund cited delays in easing electricity shortages, regulatory uncertainties, renewed labour tensions, volatility in global financial markets and slower global growth as downside risks to its growth forecast for South Africa.
“The IMF’s forecast for growth in South Africa is 2% in 2015/16, rebounding to 2.8% over the medium term, predicated on increased energy availability,” said the National Treasury.
The department said the IMF is also predicting that debt should stabilize at about 50% of GDP by 2019/20, which is lower than the 56% of GDP projected in the 2014 Article IV.
According to National Treasury, the fund said improvement in the terms of trade has temporarily lowered inflation and somewhat reduced external vulnerability.
The department said the fund projected that the current account deficit would narrow to 4.8% of GDP in 2015, from 5.4% in 2014 due to lower oil prices and the fact that the South African balance of payments has shown resilience to the appreciation of the U.S. dollar.
The department said government acknowledged IMF’s growth projections are consistent with its estimates of 2% in 2015 and 3% by 2017.
“Measures are underway to address the electricity constraints, by investing in critical infrastructure, stepping up maintenance to ensure reliability of supply, renewing existing cogeneration agreements and entering into new ones with private firms, and expediting the completion of new power stations.
“We are also taking actions to improve labour relations in South Africa, through regular engagements between social partners to discuss inequality and labour market challenges,” said National Treasury.
The department said achieving faster sustainable growth and large-scale job creation will require structural shifts in the economy, stronger supply-side value chains, higher exports, moderation in wage increases and growing private-sector investment based on confidence in the long-term business environment.
“Many of these structural reforms will take time to implement, however initiatives are already underway and the government is committed to the long-term development of our economy.
During the staff visit, the IMF holds bilateral discussions with every member country annually as prescribed in Article IV of the IMF's Articles of Agreement, to assess their economic developments and policies.
During this time, an IMF Staff Mission visits the member country to meet with key stakeholders and to collect economic and financial information.
In South Africa, Cabinet considered and noted the IMF’s findings on 10 June 2015. - SAnews.gov.za
