The International Monetary Fund (IMF) has called on the South African government to “take a more decisive approach to deal with the country’s poor finances.”
The IMF’s advice comes two weeks after visiting the Rainbow Nation to discuss its economic challenges with the local authorities.
According to the Bretton Woods institution on Tuesday, 26 November 2019, it does not have a positive outlook of Pretoria’s sluggish economic growth come next year.
The IMF blamed the country’s poor performing state-owned companies, including power utility Eskom, for the lethargic economic performance.
It recommended that measures be immediately put in place to ensure sustained recovery of the state-owned firms.
The IMF’s low rating of the country’s economy comes days after ratings agency, Standard & Poor’s Global kept South Africa one notch below sub-investment grade, thereby changing Pretoria’s outlook from stable to negative.
On its part, the South African government has recognised the need to revamp state-owned firms, starting with Eskom, which is expected to be restructured into three entities to make it more efficient in its mandate to deliver energy supplies.
“We are addressing this problem (of low performing state enterprises like Eskom). The government has decided that we are going to continue to support Eskom. We aren’t going to let Eskom go down.
“Eskom is too important. We are going to support Eskom even though we have got a huge [30 billion dollars] debt,” President Cyril Ramaphosa said on Tuesday, 26 November 2019.