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IMF sees ‘prominent’ downside risks to SA’s outlook

With spending pressures and a higher public-wage bill potentially raising financing costs and damping growth.

Downside risks to South Africa’s economic outlook are “prominent,” with spending pressures and a higher public-wage bill potentially raising financing costs and damping growth, the International Monetary Fund said.

“Fiscal consolidation is needed to strengthen public finances,” the Washington-based lender said in an emailed statement Tuesday after concluding a visit to the nation with the continent’s most-industrialised economy. While steps announced in the February budget are a move in the right direction, debt will continue to rise in the “medium term” when using the IMF’s more-conservative growth projections, it said.

The South African Reserve Bank forecasts the economy will expand 1.7% this year, compared with the IMF’s 1.5% estimate. This is“insufficient to make a meaningful dent in unemployment, poverty and inequality,” the IMF said.

Gross domestic product hasn’t grown at more than 2% a year since 2013 and is struggling to gain momentum despite political changes earlier this year that bolstered investor confidence. South Africa’s economy shrank the most in almost a decade as Jacob Zuma handed the reins of power to Cyril Ramaphosa, racking up the worst performance of the former president’s tenure.

Read: IMF’s Lagarde says global economic outlook darkening by the day

South Africa’s potential is significant, yet growth over the past five years has not benefitted from the global recovery. Policy uncertainty and a regulatory environment not conducive to private investment have resulted in growth rates in GDP that have not kept up with those of population growth, reducing income per capita, and hurting the poor disproportionately.

SA should spell out land reform plans 

The IMF said that the South African government should clearly articulate its land reform plans in order to lift uncertainty weighing on investor sentiment.

The ANC has said it plans to redistribute land without compensation to address racial inequalities that persist more than two decades after the end of apartheid. Government critics have expressed concern that those plans could infringe on property rights.

© 2018 Bloomberg
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“The IMF said that the South African government should clearly articulate its land reform plans in order to lift uncertainty weighing on investor sentiment.”

Expropriation Without Compensation.

EWC.

That’s the plan.

Capiche?

This sentence about EWC:

“expressed concern that those plans could infringe on property rights”

yes, maybe just maaaybe taking property without compensation could slightly infringe on property rights. smh.

The thing is at the moment nobody i’m speaking to really believes it will actually happen. As one guy put it, “the government can never do it, it would be total suicide for the country”. I can almost hear the government saying “hold my beer” I’m really scared for how people will react once they realize the government could be serious.

The IMF need to informally chat to Goldman Sachs, as the latter stated in Feb that “SA will be the BIG emerging market story in 2018”. There’s no coherent view.

Yes, it IS a “story” after all…but no-one knew the tongues will be talking about EWC / property rights!

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