The mission, led by Delia Velculescu, held meetings with government, business, and civil society stakeholders from December 1 to 8, focusing on policies to secure macroeconomic stability and raise SA’s long-term growth potential.
The IMF noted that despite heightened global protectionism, geopolitical tensions, and greater policy uncertainty, SA has benefited from its mineral wealth, strong institutions, flexible exchange rate, and credible inflation-targeting framework. The recent shift to a lower inflation target and the country’s removal from the Financial Action Task Force grey list have also supported a more positive credit-rating outlook.
However, the Fund warned that persistent structural impediments continue to restrict growth, job creation, and poverty reduction. Labour-market rigidities, weak governance, inadequate infrastructure, and high public debt remain major obstacles. Growth is expected to pick up only modestly, reaching 1.3% in 2025 and 1.4% in 2026, supported mainly by resilient private consumption. Medium-term prospects depend heavily on continued progress in electricity and logistics reforms.
The IMF stressed that risks to the outlook remain tilted to the downside. Slower global activity, further trade restrictions, and financial-market volatility could undermine exports and weaken confidence. Domestically, higher disinflation costs and delays in structural reforms could further constrain activity.
On fiscal policy, the Fund welcomed government’s commitment to stabilise public debt but warned that current plans may fall short without concrete, growth-friendly reforms. It recommended a more ambitious medium-term fiscal path, including improved procurement practices, a more efficient wage bill, stricter oversight of state-owned enterprises, and better targeting of subsidies. Additional revenue measures, such as curbing tax expenditures and increasing carbon taxes, could be considered if necessary.
The IMF also highlighted the need for deeper reforms to boost private-sector participation, including streamlining licences, tackling corruption, modernising logistics, and improving local-government service delivery. Stronger labour-market policies, improved urban connectivity, and expanded SME financing were identified as critical to reducing unemployment and inequality.
The mission concluded that accelerating structural reforms remains essential if SA is to unlock higher, more inclusive growth and improve living standards over the coming decade.
–IMF/ChannelAfrica–
