IMF bail-out might be the saving of SA

Cyril’s senseless lack of diplomacy
11th Jul 2019
Show all

IMF bail-out might be the saving of SA

OPINION

 

The upside and downside to no IMF bail-out

Douglas Gibson says the Ramaphosa govt is long on promises, short on delivery

We have been told repeatedly in recent days by analysts that the economy is bad – in fact, so bad – that we are on the brink of disaster, forcing us to go cap in hand to the International Monetary Fund with a request that they should bail us out. Others have said that we are not there yet.

The optimists seem to have won this round in that the IMF itself stated a few days ago that South Africa did not need a bail out. The sting in the tail was what could be seen as the bad (or good) news: the IMF said it had confidence in the government’s ability to take the action necessary to avoid a bail out. That confidence is not shared enthusiastically by many in the financial community because the Ramaphosa government is long on promises, commissions, investigations, war-rooms, conferences and the like and dismayingly short on delivery. The president has been in power for eighteen months and the economy is worse now than it was when he took over from President Jacob Zuma.

The bad news for the ANC about any bail-out by the IMF is that it imposes discipline and policy measures that the ANC government could never take because that party is stuck in the economic attitudes and solutions so fashionable in the middle of the last century. This is why our president keeps shooting himself in the foot with all the socialist nonsense. Take two examples only: firstly, changing the constitution to permit expropriation without paying the owners compensation. Nothing is more destructive than this stupidity because it would not solve the land question and it frightens the life out of potential investors.

Secondly, the NHI proposals that are a nightmare in the making because there is (almost) no department or sphere of government or state-owned enterprise the ANC has run efficiently, effectively and corruption -free in the service of our people. In the process it would destroy any area that does work (private health care) and make no meaningful difference to the lives of the poor because the billions of taxpayer Rands will undoubtedly be wasted or stolen.

The good news for the country about any IMF bail-out is that it would force the government to turn its back on its outdated ideologies and make the changes necessary to shift our economy into an entirely different path. We would have to take some pain, perhaps quite a lot of pain because of austerity, but we could start growing again, enabling a climate for the creation by the private sector of the millions of jobs that are needed for our largely unemployed work-force. Instead of being the laggard of Africa and of the developing world, South Africa could quite conceivably get back to the relative economic success of the Mbeki/Manuel years when our growth rate reached over 5%.

South Africans do not want our country to suffer the humiliation of having to admit the muck-up of its economic management and that we might not be able to pay our way in the world. Or that in a little over a decade we have converted a budget surplus into a potential budget crisis with lenders unable to trust us because of the nearly certain junk status of our bonds and an approaching over-borrowed situation. But it is a great temptation for those who know that this government will kick the can down the road for a few years and will not take the policy action needed to put things right, to think SA would be done a huge favour if the IMF had to be called in to help us sooner rather than later.

This article first appeared in The Star newspaper.

 
Douglas Gibson
Douglas Gibson
A former opposition chief whip and former ambassador to Thailand, Douglas Gibson is a keynote speaker and writer.

Leave a Reply

Your email address will not be published. Required fields are marked *

eight − 8 =