S.Africa’s economic growth faces risks from public debt, state firm bailouts – IMF

International Monetary Fund (IMF) Managing Director Christine Lagarde, speaks during a news conference after the IMFC meeting at the World Bank-International Monetary Fund annual meetings in Washington, Saturday, April 18, 2015. Jose Luis Magana/AP

JOHANNESBURG – The International Monetary Fund on Monday kept South Africa’s economic growth forecast for 2018 unchanged at 1.5 percent but warned that the economy faced several headwinds, mainly the rapid rise in public debt and potential bailouts to state firms.
International Monetary Fund logo is seen outside the headquarters building during the IMF/World Bank spring meeting in Washington, U.S., April 20, 2018. REUTERS/Yuri Gripas

“The IMF’s concerns on fiscal policy relates to the rapid increase in public debt as a share of GDP, which has doubled over the last decade, depleting fiscal buffers and constraining fiscal policy space,” National Treasury said in a statement quoting the IMF’s article IV statement following a two week-long country visit by the lender’s officials.

“Risks related to potential SOE’s (state-owned enterprises) bailouts will further constrain fiscal policy.”

Reporting by Mfuneko Toyana; Editing by James Macharia