South Africa is unlikely to need IMF funding – for now
There has been much speculations and political angst recently about whether or not South Africa will need to approach the International Monetary Fund (IMF) for financial assistance. This has come about due to South Africa’s mounting fiscal pressures, which in turn are mostly the result of the country’s lackluster growth since the great recession, particularly from 2014 (when GDP growth dipped below 2% - and has since stayed there). Complicating the fiscal challenges have been the desperate financial situation of the country’s state owned entities (SOEs) that have been hollowed out during the Zuma administration.
The only time the South African government borrowed money from the IMF was during the country’s transition to democracy in 1993, signing a $850 million loan, which it subsequently paid off in 1998. Finance Minister Tito Mboweni has previously indicated that South Africa had approached the IMF for the loan because it didn’t have enough foreign reserves. A balance of payments crisis usually warrants a country to ask for an IMF intervention.
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