Spectre of IMF bailout a necessary scare tactic – analysts

Although the prospect of an International Monetary Fund (IMF) loan has filled sectors of South African society with dread, the country’s biggest business lobby group and various thought leaders are welcoming such a bailout.

Business Unity South Africa (Busa) believes that although Presidency spokesperson Jackson Mthembu recently stated that “there is no need or appetite from the South African government to approach any institution for help”, government may have no recourse other than hold out a begging bowl to the Washington lender.

Putting a finer point on it, Busa said unless government showed it could manage spending and lending in relation to beleaguered parastatals like Eskom, it would find itself forced to seek a lifeline.

Independent economist Thabi Lekoa added that “the IMF is used as a scare tactic to make government aware that if we don’t implement the necessary policies, we may be forced to turn to them”.

One of the most crucial requirements, it is widely believed, will be for President Cyril Ramaphosa to shelve his approach of “gradualism” in favour of outright slashing of the civil service wage bill.

Naturally, it will pour fuel on union fire, possibly resulting in nationwide strike action, but so will IMF policy prescription and meddling in state spending.

Commenting on IMF intervention possibly creating the impression that the ANC is incapable of running the country’s economy, Wits University economics lecturer Lumkile Mondi said “people doubt the ability of the state to effect any economic reforms that are urgent and so required for us to deal with the structural problems”.

The governing party had become aware, he added, that the electorate was increasingly “looking for a third party to help us implement a form of structural-adjustment programme”.

And as time appears to be running out for Ramaphosa, faced by internal resistors to his government clean-up efforts and a barrage of external curve balls courtesy of the Public Protector, local IMF representative Montfort Mlachila has vouched for some of the changes we are seeing.

One of the announcements he lauded was the recent news that South Africa had repealed its visa restrictions against countries like New Zealand. The allocation of new broadband spectrum, he said, also boded well.

The fact remains though that the government is finding itself between a rock and a hard place. Either it cuts spending drastically through slashing its wage bill by at least a third, or it risks an IMF ‘takeover’ of certain elements of fiscal control.

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