IMF gives SA green light for go
20 December 2004
The International Monetary Fund (IMF) praised South Africa's economic policies in its 2004 country report, giving the thumbs up to the government's increased spending plans, efforts to consolidate foreign exchange reserves, and the fight against HIV/Aids.
However, it has expressed concern about labour market reform and grey areas around black economic empowerment.
The report praises inflation control measures by the SA Reserve Bank, saying the Bank should target the midpoint of the 3-6% inflation target.Also getting the green light is government's policy of gradually relaxing exchange controls, which it says is appropriate to address social upliftment.
According to Statistics South Africa, the country's real gross domestic product at market prices rose by 5.6% for the third quarter of 2004 - the highest rate in over eight years.
The figure was up from a revised 4.5% for the second quarter of the year and 3.8% for the first.
Statistics SA attributed the growth mainly to increases in real value added by the finance, real estate and business services sector (one percentage point), manufacturing (one percentage point) wholesale and retail trade, hotels and restaurants (0.8 of a percentage point) and transport, storage and communication (0.7 percent).
In its annual country report, the IMF cautioned that while higher growth could be anticipated, it was unlikely to significantly affect unemployment and poverty.
However, Statistics SA has reported some jobs growth in the non-agricultural business sector – an annual increase of 3.7% in September 2004 compared to a 2.5% annual increase in the June 2004 quarter.
The IMF said it remained uncertain how the government intended to fund black economic empowerment (BEE), and that not enough had been done to safeguard against a concentration of assets.
The issue of BEE benefiting a few came under the spotlight recently with the plan to purchase a share in telecoms monopoly Telkom by current and former top government officials.
The IMF also insisted the rand is not overvalued, despite its impact on the export industry in South Africa over recent quarters. It said commodity prices, such as gold and platinum, were driving the currency stronger.
The international body praised the government's decision to provide antiretroviral drugs to HIV/Aids-infected people. R12-billion has been set aside to fight HIV/Aids between 2004 and the end of 2006.
SouthAfrica.info reporter
