South Africa: Assessing the Economics of IMF T-Bills in South Africa


The government recognizes the need to address deep-rooted socio-economic issues, including unemployment, inequality and poverty, while stabilizing public debt.

The comment was made by the National Treasury in response to an International Monetary Fund (IMF) assessment of the country’s economy.

From May 26 to June 6, IMF staff met with South Africa as part of its routine economic surveillance function, as required by the IMF’s Articles of Agreement.

Economic developments in the country were discussed in meetings with IMF staff, the government, the South African Reserve Bank, state-owned enterprises, businesses and academia.

The IMF staff visit did not result in a board discussion or the release of a report on the South African economy, the Treasury said in a statement.

In its findings, the IMF estimated that South Africa’s economic recovery from the COVID-19 pandemic is likely to continue this year, with some sectors such as tourism, hospitality and construction gradually improving.

Staff noted that South Africa was benefiting from favorable commodity prices, which had increased exports.

Nevertheless, the IMF highlighted various shocks that continue to affect the country’s economic outlook. These include flooding in KwaZulu-Natal, uncertainty over conflict in Ukraine, tighter global financial conditions and lower economic growth in China.

“Staff recognizes the progress made in implementing structural reforms and encouraged South Africa to deepen and accelerate the implementation of structural reforms to overcome a number of obstacles.

Areas needing urgent attention include growth, load shedding and addressing deficiencies in the transmission system that limit the benefits of rising commodity prices,” the Treasury said.

Other key reform areas highlighted include improving procurement processes, transforming network industries, promoting competition to attract private investment; and improving the functioning of the labor market.

In addition, staff stressed that the operations, finances and governance of Eskom and Transnet should be improved to contribute to the sustainability of public finances.

“Staff underscored the need to implement growth-friendly fiscal consolidation to ensure that the country’s debt as a percentage of GDP is on a declining and sustainable path. Containing offset costs and streamlining transfers to businesses were among the recommendations presented.

“Furthermore, staff emphasized that the operations, finances and governance of Eskom and Transnet should be improved to contribute to the sustainability of public finances,” the statement read.

Economic recovery

In response, the Treasury said the government’s unwavering commitment to restoring fiscal sustainability was supported by better-than-expected, albeit temporary, revenue collection and fiscal restraint.

“As outlined in the 2022 budget, the government is using a portion of the additional revenue to reduce the budget deficit and stabilize the debt, with the majority going to meet urgent social needs, promote job creation through the presidential initiative for jobs and to support the public health sector,” he said.

He said there had been faster implementation of economic and state enterprise reforms, accompanied by fiscal consolidation to provide a stable basis for growth, ease investor concerns and support a stronger recovery. rapid and higher levels of economic growth.

The National Treasury has acknowledged that South Africa’s economic recovery has been “uneven” and that “risks remain high”.

In general, he said, IMF concerns were aligned with the government’s response program to boost economic growth, which was guided by South Africa’s Economic Reconstruction and Recovery Plan (ERRP). as well as the commitment to growth and fiscal sustainability.

Regarding the fiscal risks posed by certain state-owned enterprises, the department said the President’s Board of State-Owned Enterprises was reviewing their value addition and which state-owned enterprises would be streamlined or consolidated to reduce their continued demand on South Africa’s public resources.

“The National Treasury is working on a lasting solution to deal with Eskom’s debt in a way that is fair and just to all stakeholders. Any solution will depend on the continued progress of power sector reform in South Africa and the Eskom’s progress in its turnaround and restructuring plan,” he said.

Structural reforms

The Treasury has said it remains committed to accelerating structural reforms to foster job-led growth, as supported by Operation Vulindlela.

In this regard, 26 structural reforms have been prioritized. Of these, eight reforms have been completed while 11 others are progressing well.

Main achievements to include:

conclusion of spectrum auction, opening of bidding windows five and six of the renewable energy program

publication of the electricity regulation amendment bill

Cabinet Approval of National Rail Policy White Paper

publication of the Green Drop report to ensure better monitoring of water quality and sanitation

publish the revised list of critical skills

issuance of the RFP (Request For Proposal) to initiate third-party access to the rail freight network.

The department said work was also underway to reform the procurement system as well as the launch of the e-Visa system in 14 countries.

Regarding energy security, the Treasury said that the process of unbundling Eskom was underway.

“On December 17, 2021, the National Transmission Company South Africa SOC Limited (NTCSA) was executed. Eskom also applied to the National Energy Regulator of South Africa for the transmission license for the Transmission Company.

“On environmental issues, South Africa remains committed to addressing climate change on the basis of science, equity and sustainable development. The South African Presidential Task Force on Climate Finance will advise the countries on executing the Just Energy Transition (JET),” the Treasury said.


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