Issues raised by the International Monetary Fund (IMF) in its latest report on South Africa are already being addressed in government policies and programmes, the National Treasury has said.
“The August Cabinet lekgotla agreed that the focus of government, business, and labour must be on accelerated implementation of domestic plans to grow the economy in an inclusive way and also to create jobs, as well as to seize opportunities in the region,” the Treasury said in a statement today.
“One of these issues is the implementation of the National Development Plan (NDP) which government believes will make a significant contribution to the longer term effort to address both historical and new challenges confronting the South African economy.”
Cabinet agreed the country’s economy could no longer rely heavily on the global economy to reignite growth and create jobs.
The IMF released its Article IV report on South Africa on Tuesday. It was compiled after consultations between the country and the IMF between May 22 and June 4. The IMF holds bilateral discussions with its members every year.
According to the report, South Africa’s economy had made important strides over the past two decades, but in recent years the structural problems holding back growth and job creation had come to the fore.
The country had under-performed compared to other emerging markets and commodity exporters, increasing the already high-levels of unemployment and inequality.
This, coupled with declining competitiveness and counter-cyclical fiscal policy, had led to rising fiscal and current account deficits, which made South Africa vulnerable to a prolonged reversal of capital inflows and a further repricing of risk premia.
The rand had also been one of the worst performing emerging market currencies in 2013.
Treasury said responding to the domestic political economy and improving performance in the public sector was an ongoing process which needed a wide range of measures and interventions.
Steps were being taken to improve labour relations in key sectors and processes were being strengthened to improve service delivery and public accountability.
Measures to reignite economic growth included resolving energy constraints, increasing investment in infrastructure, improving the regulatory environment, stimulating agricultural development, increasing prospects for youth employment, and intensifying support for small businesses development.
“We remain committed to fiscal consolidation and the need to rebuild fiscal space,” the Treasury said.
“Fiscal policy remains grounded by the three principles of counter-cyclicality, debt sustainability, and inter-generational equity.”
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