Press Release: IMF Managing Director Rodrigo de Rato's Statement at the Conclusion of his Visit to South Africa, September 6-7, 2004

September 7, 2004

"It has been a great pleasure to visit South Africa, where I have had the privilege of meeting President Mbeki. I have also had valuable discussions with members of South Africa's economic team, and representatives of the private sector. I have also had the chance to visit Soweto. Overall, the trip has brought home to me how successful South Africa has been in navigating the difficult transition to democratic government.

"This is my second trip to Africa in a month. This travel has given me a deeper appreciation of the problems facing the continent, which will enable the IMF to provide a meaningful and durable contribution to its economic development. My trips have given me much encouragement that Africa can make substantive progress in alleviating poverty. In particular, I sense a deeper commitment at the highest levels of government to the process of economic reform, good governance, and closer integration into the world economy. Supported by the recovery in global economic activity, we expect economic growth in sub-Saharan Africa to rise to over 4½ percent in 2004, and to in excess of 5 percent next year. This picture masks considerable diversity in performance; those countries that have pursued sound macroeconomic and governance policies are growing much faster than those unwilling to undertake reform or those affected by conflict.

"But Africa cannot do it alone. The advanced economies must also contribute. By this I mean that they should provide more, and better coordinated, development assistance, preferably in the form of grants, to support well designed economic and social programs. Ultimately, though, the future prosperity of Africa rests upon increased trade. This means that industrial countries need to open up their economies to exports from developing countries and remove trade-distorting subsidies. I am, therefore, encouraged by the progress in the Doha Trade Round, and we at the IMF will continue to urge all parties to complete negotiations as quickly as possible.

"President Mbeki, his economic team and I exchanged views on the impressive strides that South Africa has made in rebuilding its economy since 1994. The average growth rate has more than doubled to around 3 percent, inflation has been brought firmly under control, and the public finances have been strengthened, while more resources have been allocated to the social sectors. South Africa has strengthened its international reserve position and is now much more resilient to external shocks. In the process, South Africa has made inroads in reducing poverty and improving the delivery of basic amenities, but much remains to be done.

"The economy is presently enjoying a recovery in activity that we expect to continue through at least 2005. Formidable challenges, however, remain. Growth will need to be elevated to a higher plateau if there is to be a significant fall in unemployment. This will involve strengthening South Africa's ability to attract investment by continuing efforts to improve productivity and competitiveness. It will also require pushing ahead with introducing labor market flexibility. The President and I agreed more work needs to be done to gain a better understanding of the causes and extent of unemployment.

"In our discussions, the authorities raised again their desire to see greater voice and representation for African countries in the Bretton Woods institutions.

"The HIV/AIDS epidemic has taken a devastating toll on human life in this country, as elsewhere. The government's response has been forceful and positive."


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