The International Monetary Fund has warned that South Africa still faces major risks despite a stabled economic growth forecast for 2018.
On Monday the IMF maintained South Africa’s growth forecast at 1.5 percent but says the economy faces several challenges.
The Fund said those challenges mainly arise from rapid rise in public debt and potential bailouts to state firms.
National Treasury said in a statement that “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”.
The treasury was 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” the statement added.
South Africa recently announced series of investment portfolios it was receiving from foreign countries including China.
China has said it is to invest $14.7 billion in South Africa as the Asian super power deepens its trade relations in Africa.
Meanwhile the New Development Bank, set up by the BRICS group of emerging economies, has approved loans of $300 million for energy projects in South Africa.
These facilities are to propel the growth of the South African economy.
Source: Africafeeds.com
