Why SA is not in need of an IMF bailout, yet
Treasury’s financing of the country’s burgeoning funding requirement in the past decade has been astute
The justifiable expansion in government spending that immediately followed the 2007/2008 global financial crisis has been supplanted by a decade of loose fiscal policy and subpar macroeconomic growth. Before accounting for the inevitable realisation of Eskom’s contingent liabilities to the fiscus, SA’s “lost decade” has resulted in the doubling of government debt: from 26% in the 2008/2009 fiscal year to 57% (and counting) at present.
Against a backdrop of weak government finances, sickly economic growth and seemingly absent political will to effect growth-enhancing policy reform, there’s growing disquiet about the prospect of SA approaching the IMF for bailout financing. Two key questions need to be answered to determine whether these fears are well-founded:..