{"id":321175,"date":"2019-06-03T16:42:07","date_gmt":"2019-06-03T14:42:07","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=321175"},"modified":"2019-06-03T16:42:07","modified_gmt":"2019-06-03T14:42:07","slug":"eskom-is-the-one-big-problem-ramaphosa-cant-solve-by-throwing-money-at-it-imf","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/government\/321175\/eskom-is-the-one-big-problem-ramaphosa-cant-solve-by-throwing-money-at-it-imf\/","title":{"rendered":"Eskom is the one big problem Ramaphosa can’t solve by throwing money at it: IMF"},"content":{"rendered":"

The International Monetary Fund (IMF) has concluded its latest visit<\/a> <\/strong>to South Africa, citing concerns around South Africa’s widening debt problems.<\/p>\n

Amid challenging global economic conditions, South Africa’s growth outlook will depend critically on the pace of implementation of reforms that address long-standing structural constraints, said mission leader Ana Luc\u00eda Coronel.<\/p>\n

Despite this, there is a sense of cautious optimism about economic prospects as the new government formulates its policy agenda following President Ramaphosa\u2019s election, she said.<\/p>\n

“If reform implementation accelerates sufficiently to lift business confidence and jump-start private investment, growth would be reignited,” said Coronel.<\/p>\n

“However, if reforms are delayed, investment would fail to pick up, economic growth would remain weak in the medium term, and per-capita income would continue to decline.<\/p>\n

“With underexploited export potential, the external position would remain weak and the current account deficit financed mainly by non-FDI inflows.”<\/p>\n

Cornel said that South Africa’s fiscal deficit is set to worsen as weak growth constrains revenue, current expenditure remains rigid, and public enterprises require additional support.<\/p>\n

As a result, debt pressures are likely to further increase in the near term, she said.<\/p>\n

“Weak finances and operations of public enterprises, particularly Eskom, represent a major downside risk to growth and the fiscus.<\/p>\n

“Against this background, action is needed to reduce the fiscal deficit, reverse the ongoing increase in public debt, and restore much-needed fiscal buffers to protect the government\u2019s development objectives and its ability respond to shocks.”<\/p>\n

Can’t keep throwing money at the problem<\/strong><\/p>\n

A focus on policy actions to remove long-standing structural constraints to growth and accelerate job creation is a must, said Coronel.<\/p>\n

“The government has a renewed opportunity to press ahead with policies to further strengthen governance, encourage competition, increase labor market flexibility, and, more generally, reduce the cost of doing business,” she said.<\/p>\n

“Public enterprise efficiency needs to be improved with measures that strengthen their finances and harden the budget constraints they face.”<\/p>\n

In particular, Eskom will require bold action to redefine its business model so that it becomes self-sustained and ensures affordable and reliable electricity supply, said Coronel.<\/p>\n

“Without fundamental reforms in Eskom\u2019s finances and operations, continued budget transfers or assumption of its debt by the government<\/strong> will not resolve the company\u2019s issues<\/strong>. Postponing the needed adjustment of the entity will only force greater difficulties down the road.”<\/p>\n

\u201cActing decisively on tackling structural impediments to growth would help complement the authorities\u2019 efforts to conduct sound macroeconomic policies, thus restoring policy certainty and boosting investor confidence.<\/p>\n

“An improved business environment resulting from reform implementation would attract much-needed private investment, and, in turn, lead to a virtuous cycle of growth, job creation, and social inclusion.”<\/p>\n

\n

Read: Eskom CEO announces resignation<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

The International Monetary Fund (IMF) has concluded its latest visit to South Africa, with concerns raised around South Africa’s widening debt.<\/p>\n","protected":false},"author":10,"featured_media":257225,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23],"tags":[26,2722],"class_list":["post-321175","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-government","tag-headline","tag-imf"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/321175","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=321175"}],"version-history":[{"count":8,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/321175\/revisions"}],"predecessor-version":[{"id":321195,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/321175\/revisions\/321195"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/257225"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=321175"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=321175"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=321175"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}