National Treasury has reaffirmed government’s commitment to prioritising rapid, inclusive and sustainable economic growth, in bid to tackle prevailing high levels of unemployment, poverty and inequality.

In a statement, the department said following a visit to the country, the International Monetary Fund (IMF) found that the South African economy has shown resilience in the face of disruption.

However, the IMF made the following recommendations:

Policies should focus on bolstering inclusive growth and restoring fiscal sustainability.

Managing the descent of inflation to target and safeguard financial stability.

Implement ongoing structural reforms, including in the electricity and transportation sectors, and complement with measures to improve the business environment, and function of product and labour markets while strengthening governance.

Focusing on an ambitious expenditure-based fiscal consolidation.

Monetary policy should stay data dependent and rate cuts should be considered only after inflati
on declines sustainably towards the midpoint of the target range.

Monitor financial sector risks, including those related to the bank-sovereign nexus, and enhance supervision and prudential regulations.

‘National Treasury acknowledges the constructive engagement held with the IMF team regarding South Africa’s Public Finance Management (PFA). While recognising the macroeconomic challenges highlighted by the IMF, the South African government has affirmed its commitment to prioritise rapid, inclusive and sustainable economic growth to tackle prevailing high levels of poverty and inequality.

‘The newly established Government of National Unity (GNU) is firmly committed to addressing immediate and long-term economic challenges,’ Treasury said.

The department said it is committed to ‘stabilising debt, while preserving economic stability’.

‘The fiscal position has improved, with the primary fiscal surplus target of 2% of GDP [Gross Domestic Product] being reached in 2023. South Africa remains committed to the re
form agenda focused on addressing supply constraints while supporting activity and employment.

“South Africa is making progress in the implementation of its structural reforms, as also acknowledged by the IMF.

‘The South African financial system continues to demonstrate resilience, supported by strong capital adequacy and high liquidity buffers. National Treasury’s view is that the sovereign-bank nexus is not currently a risk to the financial system. However, this will be monitored closely.

‘National Treasury welcomes the fruitful discussions with the IMF and is committed to implementing reforms to unlock sustainable and inclusive growth, improve the fiscal position, and bolster the capacity and effectiveness of the State,’ the department said.

Source: South African Government News Agency