South Africa Set for Growth Take-off If Reforms Happen, IMF Says
South Africa could drastically boost economic growth if it fixes its ailing energy and logistics sectors, and reduces crime, a top International Monetary Fund official said.
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Steps to improve the power supply – including relaxing restrictions on private power generation – could see the growth rate improve to 1.7% next year, IMF forecasts show.
Gopinath also urged South Africa to improve the performance of state-owned companies in critical sectors and allow for private sector participation, which would save it money and enhance the provision of the public services at a time when the government has limited fiscal space.
The nation’s interest bill is forecast to increase from about 19% of revenue this fiscal year to 27% by 2028-29 — about twice this year’s budget allocation for health, she said.
“As in other emerging markets, success in South Africa will require difficult reforms now that may not pay off until later, she said. “But it is an investment well worth making—and one that the IMF stands ready to support.”