South Africa: 2018 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for South Africa
IMF Staff Country Reports, July 30, 2018
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- South Africa: 2018 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for South Africa
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Bibliographic details
- Published: July 30, 2018
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781484371411.002
Overview
- Reflecting slow progress on reforms, weakened governance, and elevated policy uncertainty, growth remains subdued.
- The economy is unable to create enough jobs; inclusive growth has been elusive, making South Africa one of the most unequal societies.
- Growing government spending has led to a doubling of public debt in the last decade.
- Credible monetary policy has kept inflation expectations anchored, albeit at near the top of the target band.
- The current account deficit remains financed by potentially volatile portfolio inflows.
- The new administration’s immediate priority has focused on improving governance and restoring confidence.
Macroeconomic findings
- Growth: subdued due to slow reform progress, weakened governance, and elevated policy uncertainty.
- Employment: the economy is not creating enough jobs; inclusive growth has not been achieved.
- Inequality: South Africa described as one of the most unequal societies.
Fiscal situation and public debt
- Government spending: growing, with public debt having doubled in the last decade.
- Fiscal policy: highlighted as a central concern given rising debt dynamics.
Monetary policy and inflation
- Monetary credibility: credible monetary policy has kept inflation expectations anchored.
- Inflation positioning: inflation expectations are at or near the top of the target band.
External sector
- Current account: deficit remains financed by potentially volatile portfolio inflows, implying sensitivity to capital flow reversals.
Policy priorities and recommendations
- Immediate priority for the new administration: improving governance and restoring confidence.
- Implied policy focus areas (from findings): advance structural reforms to boost growth and job creation; strengthen fiscal consolidation to stabilize public debt; maintain credible monetary policy to anchor inflation expectations; reduce vulnerability to volatile capital flows.
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- Country Report