IMF Welcomes South Africa’s Infrastructure Investment

IMF

The International Monetary Fund (IMF) has welcomed South Africa’s latest R845-billion public infrastructure plan which will upgrade and expand power, transport, telecoms and water networks in the country in the next three years. However they add that a rigorous assessment is needed to ensure the key projects are prioritised to maximise the long-term benefits.

This recommendation came from the IMF Staff Report for the 2012 Article IV consultation with SA, a 72 page document exploring SAs spending and growth outlook which the IMF lowered to 2.6%. It states that the proposed infrastructure plan would help remove existing supply bottlenecks which have constrained economic activity in the country in recent years and discouraged investment in its natural resource industry.

The IMF also said that the private sector needed to be involved more in network industries to help contain the fiscal risks and that it was urgent that public spending be rebalanced so that the majority was not on wages, which currently makes up 40% of government expenditure, to allow for greater room for capital spending.

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