SA GETS IMF PRESCRIPTION

…cut irrelevant, underperforming SOEs - and no more backing without reforms

JOHANNESBURG - The South African government should take a full inventory of state-owned enterprises (SOEs) and divest or liquidate those that are no longer relevant – or which are failing to meet their objectives.

This is according to preliminary findings by staff of the International Monetary Fund (IMF) who consulted virtually with government, the SA Reserve Bank, Eskom, business, organised labour and academia in November.

The Washington, DC-based lender also said any support to SOEs should be made on condition that concrete and measurable actions are rolled out to improve their performance and viability.

According to IMF staff, there has been little progress in the SA government's implementation of structural reforms at SOEs, leaving continued weaknesses.

"SOEs carrying out predominantly government business should have their functions merged into a related government department or an agency," the preliminary report suggests.

The IMF staff consultations form part of the IMF's surveillance function. The report stresses, however, that the preliminary views of the IMF staff do not necessarily represent the views of the IMF's executive board. A final report will be submitted to the IMF board in February next year.

In preliminary findings, IMF staff recommend that "structural rigidities" be tackled immediately to increase the SA economy’s productivity and competitiveness and reduce poverty and inequality.

The report also flags that what little economic recovery there has been, failed to make a dent in unemployment or improve business confidence.

In response to the IMF staff's preliminary findings, National Treasury said in a statement on Wednesday that, in general, it believes the concerns highlighted in the report are aligned with government's response programme to stimulate economic growth.