Share

UPDATE : SA does not need a loan but it can do much better on growth policies, says IMF

The International Monetary Fund’s (IMF) senior resident representative in South Africa Montfort Mlachila has confirmed that South Africa has not requested an IMF loan and he added that, “We will not see a balance of payments (support programme) for South Africa.”

Monfort was speaking at a Bureau for Economic Research programme in Johannesburg on Thursday. “We much prefer countries to resolve their own problems. I have no doubt SA has the ability to address its own problems on the growth front and the fiscal front.” 

But Mlachila also said many microeconomic reforms are needed to grow the country which was growing far more slowly than its emerging market peers. 

“Due to state capture, a lot of public investment was wasted or ineffective,” said Mlachila who used various slides showing data that revealed South Africa’s “decline in growth is dramatic for a country not facing civil war”. 

“The economy over the past decade has been misallocating resources. In terms of export performance, South Africa has had a lacklustre performance,” he said showing how leading emerging markets performed much more strongly. 

He said the most binding restraints on growth were in the micro-economy rather than in macro-economic policy.

“One of the restraints is wage bargaining processes which is imposed on smaller companies,” he said referring to how centralised bargaining wage agreements are extended to small and medium-sized companies.

Mlachila added that, “You tend to see fairly large increases in wage compensation relative to productivity gains. Compensation has been above productivity gains. At the same time, SA’s global competitiveness has been declining over time and (in the) World Bank’s Doing Business Indicators.  

“Growth can be improved by undertaking reforms. The greatest payoff would come from labour market reforms,” he said. Outlining what he thought would stimulate growth, he counselled South Africa to “avoid self-inflicted injuries” and to undertake “readily achievable policies to boost confidence” like broadband allocation and the simplification of visa rules, both for tourists and for investors.  

Mlachila also said that IMF studies showed that South Africa’s growth trajectory would improve by making the SOE sector leaner and more efficient. 

He did not speak about Eskom and the utility’s debt drag on the fiscus.  

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
18.89
+0.2%
Rand - Pound
23.87
+0.1%
Rand - Euro
20.39
+0.2%
Rand - Aus dollar
12.33
+0.1%
Rand - Yen
0.12
+0.1%
Platinum
908.05
0.0%
Palladium
1,014.94
0.0%
Gold
2,232.75
-0.0%
Silver
24.95
-0.1%
Brent Crude
87.00
+1.8%
Top 40
68,346
0.0%
All Share
74,536
0.0%
Resource 10
57,251
0.0%
Industrial 25
103,936
0.0%
Financial 15
16,502
0.0%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders