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The IMF pointed out that various challenges likeKwaZulu-Natal floods, uncertainty arising from the conflict in Ukraine, tightening of global financial conditions and lower economic growth in China continue to dampen the country’s economic outlook.
The IMF, as part of its routine economic surveillance meetings with the South African Government estimated that South Africa’s economy would continue its recovery from the COVID-19 pandemic this year as some sectors such as tourism, hospitality and construction,have shown signs of improvement.
After the meetings with the government, the South African Reserve Bank, state-owned enterprises (SOEs), business and academia, to review the economic developments in the country, the IMF staff acknowledged that South Africa gained in exports, benefiting from favorable commodity prices.Nonetheless, the IMF pointed out that various challenges likeKwaZulu-Natal floods, uncertainty arising from the conflict in Ukraine, tightening of global financial conditions and lower economic growth in China continue to dampen the country’s economic outlook. It noted that though some amount of progress has been achieved by the country in implementing structural reforms,South Africa has to deepen and fast track the implementation of structural reforms to address a number of challenges like unemployment, government debt, inequality, and poverty,and obstacles like load shedding,deficiencies in the transportation system etc. The IMF team observed that operations, finances and governance of Eskom and Transnet should be improved to contribute to the sustainability of public finances.Some of the other critical areas highlighted include better procurement processes, transforming network industries, attracting private investment; and a functioning labour market.
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Responding to the IMF observations, The National Treasury acknowledged that South Africa’s economic recovery had been “uneven” and “risks high” and that the government is committed to speed up structural reforms. It said, the government’s response programme is aimed to stimulate economic growth, which was guided by South Africa’s Economic Reconstruction and Recovery Plan (ERRP).
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