Treasury Reaffirms Commitment to Inclusive and Sustainable Economic Growth

In a recent statement, National Treasury acknowledged that while the South African economy has demonstrated resilience amidst disruptions, the IMF emphasized several key areas for improvement.

National Treasury has reiterated the government's commitment to fostering rapid, inclusive, and sustainable economic growth to address high levels of unemployment, poverty, and inequality in South Africa. This comes in response to recommendations made by the International Monetary Fund (IMF) following its visit to the country.

In a recent statement, National Treasury acknowledged that while the South African economy has demonstrated resilience amidst disruptions, the IMF emphasized several key areas for improvement. The IMF’s recommendations include:

Fostering Inclusive Growth and Fiscal Stability: Implement policies that support economic inclusivity and work towards restoring fiscal sustainability.

Managing Inflation and Financial Stability: Ensure inflation is reduced to target levels while safeguarding financial stability.

Advancing Structural Reforms: Focus on ongoing reforms in sectors like electricity and transportation while improving the business environment and governance.

Ambitious Fiscal Consolidation: Aim for a fiscal consolidation based on expenditure control.

Monetary Policy Adjustments: Maintain a data-driven approach to monetary policy, considering rate cuts only when inflation sustainably moves towards target ranges.

Monitoring Financial Sector Risks: Keep a close watch on financial sector risks, especially those linked to the bank-sovereign relationship, and strengthen supervision and prudential regulations.

National Treasury affirmed the government's commitment to stabilizing public debt while ensuring economic stability. The department highlighted progress, noting that the primary fiscal surplus target of 2% of GDP was achieved in 2023. It further emphasized that South Africa remains dedicated to a reform agenda aimed at addressing supply constraints and supporting job creation.

The statement also acknowledged the strength of South Africa’s financial system, which continues to show resilience with strong capital adequacy and high liquidity buffers. Treasury expressed confidence that the sovereign-bank nexus does not currently pose a risk to the financial system but assured close monitoring.

Treasury welcomed the IMF’s constructive engagement, reaffirming its resolve to implement reforms that will unlock sustainable growth, improve the fiscal position, and enhance the effectiveness of the State.