International Monetary Fund. Picture: ISTOCK
International Monetary Fund. Picture: ISTOCK

SA has not asked the International Monetary Fund (IMF) for assistance and does not need it, the lender’s resident representative in the country has said.

The IMF doesn’t see a balance-of-payments problem in SA, which means there’s no need for IMF support, Montfort Mlachila said on Thursday at a conference hosted by the Bureau for Economic Research (BER) in Johannesburg.

“To tell you the truth we — by ‘we’ I mean the institution — much prefer countries to resolve their own problems and I’ve no doubt that SA has the capacity to address its own problems in the various areas, especially on the growth front, as well as on the fiscal front,” he said.

The country’s biggest business lobby has warned that approaching the IMF could become necessary unless there is enough political will to address the problems at cash-strapped Eskom and remove impediments to economic growth.

The ANC and the SA Reserve Bank have quashed speculation that the government may have to ask the IMF for help, with governor Lesetja Kganyago saying the nation’s finances haven’t deteriorated to that point.

Mlachila said structural reforms can help boost growth, which the BER forecasts at 0.2% for the year. These include the allocation of broadband spectrum; a simplified visa process; increased competition in productive and service markets; more labour-market flexibility; and leaner and more efficient state-owned entities (SOEs).

Broadband allocation and simplifying the visa process are “readily achievable policies” that can boost confidence, Mlachila said.

BER chief economist Hugo Pienaar said at the same conference that SA’s ratio of debt to GDP would increase by five percentage points if R250bn ($29bn) of Eskom’s debt were transferred to the government’s balance sheet. The power utility can only sustain R150bn of its R440bn debt, company executives told investors last week.

“The public-debt trajectory is not favourable and frankly becoming uncomfortable, and the debt-service bill is crowding socially desirable spending,” Mlachila said, repeating an IMF warning from December.

The BER projects a budget deficit of 6% of GDP for the year. That compares with the Treasury’s February forecast of 4.5%, which would already have been the biggest in a decade. The government announced an extra R59bn bailout for Eskom last month.

With Andre Janse van Vuuren

Bloomberg


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