On March 5, 2015, David Lipton, First Deputy Managing Director of the International Monetary Fund (IMF), issued the following statement in Cape Town:
“It has been a great pleasure to make my second visit to South Africa as First Deputy Managing Director of the IMF. I had the privilege to meet Finance Minister Nhlanhla Nene, Minister for Cooperative Governance and Traditional Affairs Pravin Gordhan, and South African Reserve Bank Governor Lesetja Kganyago. I also had the opportunity to exchange views with representatives of labor unions, business, and academia.
“South Africa holds great promise and opportunity, but at the same time it faces great challenges, in particular, to accelerate growth, create jobs for the millions of people out of work, and reduce inequality.
“Real GDP growth fell to a post-crisis low of 1.5 percent in 2014 due to protracted strikes, electricity shortages, and soft external demand. Only a moderate growth rebound to 2.1 percent is expected for 2015. Lower oil prices are reducing South Africa’s inflation and the current account deficit, but structural bottlenecks continue to hamper growth.
“With past growth drivers having run their course, constrained policy space, and growing infrastructure bottlenecks, a decisive period of reform is essential.
Priorities include overcoming the debilitating problem of electricity shortages, improving industrial relations and the functioning of the labor market, enhancing education and training quality and reducing skill mismatches, boosting competition and trade, and facilitating new firms’ entry. The 2015 Budget offers a foundation, another step toward fiscal sustainability, which also takes growth into account. And the South African Reserve Bank has aptly managed inflation and growth.
“Bold leadership is needed by all stakeholders to address these challenges. Business, labor and government each have a role to play. Working together is key to revitalizing the South African economy and making it truly inclusive.”