South Africa: 2019 Article IV Consultation—Press Release; and Staff Report; and Statement by the Executive Director for South Africa
IMF Staff Country Reports, January 30, 2020
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- South Africa: 2019 Article IV Consultation—Press Release; and Staff Report; and Statement by the Executive Director for South Africa
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Bibliographic details
- Published: January 30, 2020
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781513528502.002
Key findings on growth and labor markets
- Subdued private investment and exports, and increased uncertainty have depressed growth and worsened social indicators.
- Given the structural nature of the growth slowdown, reforms are needed that reduce the cost of doing business and boost private investment.
- Subject tags include: Banking, Fiscal policy, Fiscal stance, Inflation, Labor, Labor markets, Prices, Public debt, Revenue administration.
- Keywords include: Africa, CR, debt, Fiscal stance, Global, government, government policy, headline CPI inflation, IMF South Africa team, Inflation, inflation target range, ISCR, Labor markets, policy, policy directive, U.S. dollar.
State-owned enterprises (SOEs), fiscal position, and public debt
- SOEs’ risks are materializing, triggering government bailouts of Eskom and administrative intervention in other entities.
- High fiscal deficits have boosted debt.
- Recommendation: establish a credible debt anchor to stabilize debt in the medium term.
- In the absence of fiscal space, a gradual and growth-friendly fiscal consolidation and increased spending efficiency are needed.
- The consolidation should be accompanied by structural reforms to support private investment.
External position and financial flows
- Nonresident investors are shedding equities and local currency bonds but showing appetite for foreign currency sovereign bonds amid supportive global financing conditions.
- The external position is assessed as moderately weaker than implied by fundamentals and desirable policies.
Inflation and prices
- Inflation has slowed to around the mid-point of the target band, aided by one-off factors, but inflation expectations are higher.
- Keywords highlight focus on headline CPI inflation and the inflation target range.
Banking sector and financial stability
- Banks are sound, albeit with pockets of vulnerabilities.
Policy recommendations and priorities
- Implement a gradual, growth-friendly fiscal consolidation paired with spending-efficiency improvements.
- Establish a credible debt anchor to stabilize public debt in the medium term.
- Pursue structural reforms to lower the cost of doing business and boost private investment, addressing the structural nature of the growth slowdown.
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