The International Monetary Fund (IMF) yesterday warned that South Africa’s public finances would deteriorate further and hurt growth prospects if the new administration failed to take bold decisions to reform the economy.
The lender, which recently concluded its visit to the country, said there was “cautious optimism” about South Africa’s economic prospects as President Cyril Ramaphosa’s new government formulates its policy agenda, but said growth would be dependent on how fast reforms are implemented.
Ana Lucía Coronel, who headed the IMF team, said if reforms were delayed, investment would fail to pick up and economic growth would remain weak in the medium term.
“The fiscal deficit is set to worsen as weak growth constrains revenue, current expenditure remains rigid, and public enterprises require additional support. As a result, debt pressures are likely to further increase in the near term,” Coronel said.
“Weak finances and operations of public enterprises, particularly Eskom,
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