Clarity on land reform needed to remove uncertainty - IMF
Updated | By Pieter van der Merwe
Members of the International Monetary Fund (IMF) concluded their visit to South Africa on Monday.
Amid concerns over South Africa's economy, a team from the IMF has recommended that government clearly spells out its plans around land reform.
This comes amid plans by the government to redistribute land without compensation to address racial inequalities.
One of the most unequal societies in the world has an unemployment rate of 26.7%, while the economy contracted by 2.2% in the first quarter of 2018.
This while growth is expected to remain weak for the foreseeable future.
"Clearly articulating policy and regulatory decisions related to land reform in a fair, transparent, and market-friendly manner would help remove uncertainty, which is currently weighing on investor sentiment," reads a report by the IMF.
The report also lists a number other challenges facing the country.
Government debt-to-GDP currently sits at 53.1% - worsened by weak revenue collection, low growth and repeated bailouts of struggling state-owned entities (SOEs).
Since President Cyril Ramaphosa's inauguration in February, government has announced a number of steps to try and facilitate growth and balance its books.
But the IMF says these proposed reforms - management changes at SOEs, an inquiry into tax administration, and steps to limit wasteful expenditure - need to followed by "strict enforcement of good regulations".
Stimulating growth
The IMF report states there are short term reforms, such as maximising social grant benefits, and clarifying mining regulations.
Long term measures would include improving SOE efficiancy, reducing red tape to strengthen competition among businesses, and enhancing flexibility in the labour market.
It also suggests the national minimum wage could benefit workers, but adds the "impact should be carefully monitored".
"Clearly articulating policy and regulatory decision related to land reform in a fair, transparent, and market-friendly manner would help remove uncertainty," the report states.
Balancing the books
Debt-to-GDP nearly doubled over the last decade and the IMF recommends cutting spending and improving tax collection.
The report suggests "eliminating irregular and wasteful expenditure" and "forcefully strengthening tax administration".
The IMF believes South Africa could stimulate economic growth and reduce debt if it removes uncertainty and forcefully implements its reform agenda.
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