SA economy

Cosatu Backs Conditional Partial Privatisation As IMF Warns Of ‘Prolonged Period Of Weak Economic Growth’

Riyaz Patel

The Congress of South African Trade Unions (Cosatu) says it would support private partnerships in state-owned enterprises but only if certain conditions are met.

Cosatu spokesperson Sizwe Pamla told 702 radio the federation would support privatisation if the government retains majority control of the institutions, and if no job losses occurred.

The trade union federation insisted though that its stance on privatisation hasn’t changed after its spokesperson was quoted in City Press, saying he believes some non-performing SOEs can benefit from partial privatisation.

Cosatu’s support for the partial privatisation of SOE’s coincides with a warning by the International Monetary Fund (IMF) that South Africa is at risk if economic reforms don’t materialise fast.

“Failure to implement the needed adjustment in government and SOE (state-owned entities) spending and efficiency will worsen debt dynamics, erode financial stability, and further raise the country risk premium,” the global lender said Monday.

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“South Africa faces a prolonged period of weak economic growth marked by rising unemployment, inequality and greater credit-rating risk if the government does not act fast to implement reforms.

Since taking over in early 2018, President Cyril Ramaphosa has vowed to stimulate economic growth by winning back foreign investors, easing policy log-jams and reforming cash-guzzling state firms, particularly power utility Eskom which is reliant on government money to stay afloat.

“The FY20/21 budget to be presented in February should articulate measures to address fiscal and SOE challenges and stabilize government debt,” the IMF said in statement at the conclusion of a 2-week, Article IV consultation visit to the country.

During an Article IV consultation, an IMF team of economists assesses economic and financial developments and discuss the country’s economic policies with government and central bank officials.


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