The IMF has joined a chorus of voices putting pressure on President Cyril Ramaphosa’s government to accelerate moves to boost economic growth and rein in debt.
The Washington-based institution, the go-to lender for countries in financial distress, also appeared to throw its weight behind reforms proposed in finance minister Tito Mboweni’s economic strategy paper.
The statement, released after the IMF’s recent country mission to SA, came just three days after S&P Global Ratings, which has the country in sub-investment grade, warned SA of further downgrades. The agency said the country needed to show progress in arresting a deterioration in its finances that threatens to push debt to 80% of GDP within a decade.
Though the Ramaphosa administration is in the “process of building support” for policies aimed at addressing these risks, a “more decisive approach to reform is urgently needed”, the IMF said on Monday.
SA has a limited window of opportunity to make changes, according to the IMF, which said the February budget has to outline measures to tackle the government’s fiscal position and address challenges at stricken state-owned companies, echoing comments made in July by Moody’s Investors Service, the only major ratings agency that still has SA in investment grade.
Moody’s has warned of a possible downgrade if the February budget does not deliver, a step that would see SA being kicked out of major bond indices, resulting in capital outflows that would weaken the rand and put upward pressure on the government’s borrowing costs. In an economy burdened