## South Africa ## Source details **Canonical URL:** [South Africa](https://www.imf.org/-/media/files/meetings/2026/annual/imfc/south-africa.pdf) ## Other formats - [Markdown version](/-/media/files/meetings/2026/annual/imfc/south-africa.pdf.md) - [Structured JSON version](/-/media/files/meetings/2026/annual/imfc/south-africa.pdf.json) --- ### Summary of key messages and regional priorities - Statement delivered by Honorable Lesetja Kganyago, Governor of the South African Reserve Bank, on behalf of Angola, Botswana, Comoros, Eswatini, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, South Africa, Tanzania, Zambia, and Zimbabwe. - Occasion: International Monetary and Financial Committee, Fifty-Fourth Meeting, October 16–17, 2026; statement date: October 17, 2026. - Core emphasis: preserve macroeconomic stability, strengthen resilience, and ensure differentiated Fund support for Sub-Saharan Africa (SSA) amid uneven global growth and mounting vulnerabilities. ### Global and regional outlook and risks - Observations on global economy: - Global resilience supported by stronger fundamentals, technology investment and temporary adjustment mechanisms. - Economic activity becoming increasingly uneven alongside depleted buffers, raising concerns about durability of current growth dynamics. - Growth largely concentrated in economies benefiting from rapid adoption of artificial intelligence (AI) and favorable terms of trade. - Many low-income countries (LICs) and Fragile and Conflict Affected States (FCS) remain less connected to AI-related drivers. - Greater exposure to the prolonged war in the Middle East and related external shocks risks slowing global income convergence. - Higher energy and food prices are pushing up global inflation, benefiting some energy exporters while weighing on commodity-importing economies. - Medium-term growth outlook is subdued and subject to significant downside risks, including: further conflict escalation, energy and trade disruptions, extreme weather events, financial-market volatility, and a reassessment of AI-related expectations. - Upside potential arises from stronger productivity gains and more sustained AI investment. - Financial conditions and vulnerabilities: - Financial conditions remain broadly accommodative, but underlying vulnerabilities continue to build. - For many EMDEs, including SSA, risks include a correction in AI-related asset prices, further sharp rise in sovereign bond yields, or severe cyber incidents triggering tighter global financing conditions, increased capital-flow volatility, and renewed pressures on market access and borrowing costs. - Amplifying factors: liquidity mismatches, concentrated exposures, growing sovereign-financial linkages, interconnected nonbank financial institutions and climate events. - Concern that elevated public debt and persistent fiscal pressures in systemic economies may heighten vulnerabilities in the international monetary system and reduce scope for policy adjustment during future shocks. - Welcome greater attention to debt transparency and financing structures, particularly where complex creditor compositions or financing instruments may create contingent liabilities, obscure sovereign risk exposures, or complicate debt sustainability assessments. ### Policy recommendations and Fund engagement - Monetary and financial policy: - Monetary policy should preserve price stability and keep inflation expectations anchored, with the Integrated Policy Framework (IPF) guiding use of complementary tools where needed to address macrofinancial risks. - Strengthen financial regulation, supervision and market oversight to contain growing vulnerabilities and enhance market resilience. - Fiscal policy and reform: - Fiscal policy should rebuild buffers while safeguarding priority transformational investment and social spending. - Growth-friendly tax reforms can strengthen revenue mobilization while reducing distortions to production, investment, innovation, and jobs. - AI and structural transformation: - AI offers significant potential to raise productivity and support structural transformation, but realizing gains requires multilateral cooperation and sequenced, pragmatic adoption pathways reflecting countries’ institutional capacity and development priorities. - Fund toolkit and support for SSA: - Differentiated and comprehensive Fund support for SSA remains essential. - Continued Fund support should assist with rebuilding fiscal buffers, addressing debt vulnerabilities, enhancing climate mitigation and adaptation strategies, and strengthening institutional capacity. - Pace and sequencing of reforms should reflect country circumstances and financing constraints. - The update on the FY26 FCS Strategy highlights encouraging progress in the Fund’s engagement with the region. - Surveillance, assessments, and program design: - Welcome the Global Policy Agenda’s focus on strengthening coherence of the Fund’s policy toolkit. - Support the conclusion of the Comprehensive Surveillance Review (CSR) to sharpen surveillance within core mandate, prioritize country-specific macro-financial critical issues, and allow deeper coverage of risks including outward spillovers, technological change, and geoeconomic fragmentation. - Caution against narrow prioritization that could dilute attention to climate-related risks affecting many SSA countries. - Persistent data gaps and analytical capacity constraints underscore need for closer integration of surveillance and capacity development. - Support FSAP Review reforms to make assessments more agile, risk-based, and responsive to country circumstances, with stronger integration with Article IV consultations and emphasis on implementation and follow-up. - Welcome the LIC-DSF review reforms that better distinguish external debt risks from overall public debt stress, enhance measurement of debt carrying capacity, introduce a domestic debt module, improve debt data quality and coverage, and more systematically integrate climate and development challenges. - Effective implementation of LIC-DSF reforms will require sustained technical support and outreach; monitor methodological changes that could affect debt assessments or borrowing constraints under the Debt Limits Policy (DLP). - See scope to strengthen timely, orderly, predictable and coordinated debt resolution, including improvements to the Common Framework and ongoing work under the Global Sovereign Debt Roundtable (GSDR). - Crisis prevention and lending capacity: - As current financial conditions magnify liquidity challenges, support strong crisis prevention and response mechanisms for countries facing temporary liquidity pressures, including implementation of the IMF-WB three-pillar approach. - Launched the Global Borrowers' Platform to strengthen ownership, coordination, and collective engagement on sovereign debt challenges; look forward to Fund support. - Welcome the 2026 Review of Program Design and Conditionality (ROC); support objective of strengthening coherence and calibration of Fund-supported programs and reinforcing that adjustment strategies reflect country circumstances, particularly balance of payments needs. - Caution that excessive reliance on front-loaded fiscal consolidation in vulnerable countries could risk weakening growth-enhancing investment and essential social spending and undermine program ownership. - ROC calls for: realistic financing strategies, systematic risk assessment, scenario analysis, contingency planning, disciplined prioritization and sequencing of fewer but deeper reforms, explicit recognition of political economy constraints, stronger social and distributional analysis, alignment between reform objectives and implementation capacity, and earlier course correction when circumstances change. - Urge the Fund to leverage its catalytic role in mobilizing financing and providing an anchor for macroeconomic stability amid declining official development assistance, tighter financing conditions, and limited fiscal buffers. - Regular assessments of adequacy of concessional facilities, access limits, and financing terms should ensure vulnerable members receive appropriate support. - Urge remaining members to operationalize the Poverty Reduction and Growth Trust (PRGT) subsidy framework and safeguard concessional financing for LICs. - Accelerated SDR rechanneling, including through Multilateral Development Banks (MDBs) and other prescribed holders, would further strengthen support for vulnerable members. - Institutional reforms and governance: - A strong, quota-based and adequately resourced IMF is central to the global financial safety net. - Completion of the 16th General Review of Quotas (GRQ) is urgent and should be completed alongside the 17th GRQ. - The Diriyah Guiding Principles provide an important foundation for future quota and governance reforms. - Preserve voice and representation of poorer members and ensure quota reforms do not further disadvantage EMDEs. - Urge deeper cooperation between the Fund and Regional Financing Arrangements (RFAs) to strengthen support for vulnerable members and reinforce the global financial safety net. - Diversity and inclusion: - Diversity and Inclusion (D&I) is integral to preserving the Fund's legitimacy, effectiveness, and global character. - Call for more ambitious efforts to strengthen gender and geographical diversity and ensure equitable opportunities and treatment for staff at all grades and from across the membership. - Reiterate need to strengthen recruitment, retention, and advancement of citizens of SSA countries and other underrepresented regions throughout the career pipeline. - Express concern by limited progress in increasing the number of elected women Executive Directors, in line with voluntary targets, to improve gender diversity at the IMF Executive Board. --- _Source: https://www.imf.org/-/media/files/meetings/2026/annual/imfc/south-africa.pdf_