National Treasury has reiterated government’s commitment to prioritising the COVID-19 pandemic response, reducing the fiscal deficit and stabilising debt over the next five years.
The department made the commitment during a series of virtual meetings with the International Monetary Fund (IMF) between 15 and 25 January 2021.
The meetings are part of the IMF’s routine staff visit engagements with the country.
During the meeting, the IMF staff discussed economic development in the country with government, the South African Reserve Bank, State-owned enterprises (SOEs), business and academia.
In a subsequent statement, National Treasury said the visit does not result in a board discussion or publication of a report on South Africa’s economy.
In a statement, the IMF noted that the COVID-19 pandemic had worsened South Africa’s growth and fiscal vulnerabilities and therefore, government is rightly prioritising the response to the pandemic.
The IMF urged South Africa to reduce large fiscal deficits and debt levels through the containment of the wage bill, and avoiding ill-targeted subsidies and transfers to inefficient SOEs.
“South Africa should advance structural reforms that will raise long-term growth,” said the IMF.
Treasury noted the content of the IMF press release, particularly the key risks identified and proposed policy recommendations.
Treasury said government has prioritised the response to the pandemic with a comprehensive rollout strategy and an accompanying logistical framework will be implemented.
Government has also pledged transparency in its dealings with vaccine manufacturers and various other initiatives.
Currently, different options are being considered to fund the vaccines for COVID-19. However, funding will not be a constraint in government’s focus to doing the right thing and saving lives, Treasury said.
South Africa has committed to reducing its fiscal deficit, stabilising debt over the next five years and returning public finances to a sustainable position.
“We have confirmed that government’s medium-term policy priorities are economic recovery, fiscal consolidation, and reductions to the wage bill to assist in narrowing the budget deficit,” said Treasury.
In December, the Labour Court dismissed the application by public sector unions seeking to force government to implement salary increases for this year as part of the 2018 wage agreement.
Treasury said while the decision by the Labour Court is being challenged for completeness, the Labour Court decision was encouraging in the context of a constrained fiscal framework.
Operation Vulindlela
Through Operation Vulindlela, Treasury said South Africa remains committed to implementing structural reforms.
Operation Vulindlela is seen by government as a means to unlock and fast track the implementation of the structural economic reform agenda.
“Operation Vulindlela will support the implementation of the economic recovery plan by accelerating priority structural reforms.
“It is based on similar initiatives in countries such as the United Kingdom and Malaysia, as well as lessons learnt in South Africa,” Treasury said.
Thehe initiative is staffed by a full-time technical team that draws on additional expertise and capacity in the public and private sectors. The team is currently assisting the economic cluster, Cabinet and the President to coordinate and accelerate the implementation of a limited number of priority reforms.
Treasury said government is committed to the Economic Reconstruction and Recovery Plan in order to accelerate growth, secure fiscal sustainability and create much needed jobs.
“The Budget Speech in February 2021 will provide further details on government’s plan in supporting inclusive economic growth,” the department said.
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