A number of media outlets have picked up on the fact that payments for South Africa’s IMF loan will only need to begin in 2023. True as this may be in terms of the letter of the agreement, in reality we have no alternative than to begin dealing with it immediately.
The loan buys us some breathing space to deal with an extraordinary set of challenges, but South Africa finds itself in this situation not only because of the public health crisis, but because of a long run of bad governance and counterproductive policy.
Ultimately, without enhanced growth – in the order of 5% of GDP a year or more – and the investment to produce it, South Africa’s prospects are bleak. For this reason, presumably, both the IMF and Treasury have stressed the need for reforms that prompt such growth.
To do this, three changes are imperative.
We will not achieve this without serious policy change. The push for expropriation without compensation needs to be halted and reversed. Land reform, a necessary policy, can be conducted so as to improve rather than diminish property rights.
Empowerment policy must be rethought, to incentivise business, to promote employment – and above all to uplift those living in poverty, and suffering exclusion from opportunity.
The state needs to be professionalised. Cadre deployment needs to be abandoned, and effective, meritocratic administration put in place. Pride in service to the country, not fealty to the party, must guide it.
If we fail to do this, we face seeing this loan, intended as relief to lighten our load, turned into a burden that will weigh us down. Reform is the real repayment plan – less to the IMF than to our own future. It needs to begin now.
Terence Corrigan
Project Manager, Institute of Race Relations
