On 21 November 2018, the International Monetary Fund said South Africa’s economic recovery was under pressure from rising debt at state companies, capital outflows and the drag of global trade tensions.
The lender had already cut its outlook for Africa’s most industrialised economy in October, saying growth would reach 0.8 percent in 2018 instead of the earlier 1.5 percent forecast. South Africa’s Treasury was projecting 0.7 percent growth.
The warning landed as President Cyril Ramaphosa faced a weak economy and a difficult budget environment. The IMF said the early optimism around reform had faded because growth remained sluggish and implementation had run into obstacles.
Eskom, the state power utility, was singled out as a major risk. The company is heavily indebted and struggling to keep the country supplied with electricity, adding to pressure on the government and other cash-strapped state-owned firms.
The IMF also addressed the debate over land policy. It said the proposal to change property laws to allow expropriation without compensation should be handled carefully and informed by international experience.
“Land reform should focus on enhancing agricultural productivity and strengthening tenure security,” said the IMF.
A parliamentary team had recommended a constitutional amendment to make it possible for the state to expropriate land without compensation. That recommendation was due to go to the national assembly for a vote.
