/ 2 November 2018

Editorial: If we don’t fix it, IMF may

'Rail utility Prasa is so inept that
'Rail utility Prasa is so inept that, to keep it running, it now has to report to a court about its measures to maintain safety.'

We have a plan, the latest incarnation of which was the medium-term budget policy statement the new finance minister tabled in Parliament two weeks ago. 

Tito Mboweni made it clear that, if this plan does not work, we may well have to implement a different kind of plan — one that involves knocking on the door of the International Monetary Fund (IMF), and abiding by its conditions.

This would be a different creature to the notorious structural adjustment programmes the IMF previously rolled out across the continent with deleterious effects. We could, for instance, expect the IMF to insist that the country’s welfare security net, social grants, remain in place.

But we should fully expect that the IMF’s main focus would be our costly civil service and bloated, indebted and dysfunctional state-owned enterprises.

Rail utility Prasa is so inept that, to keep it running, it now has to report to a court about its measures to maintain safety.

The civil service is already in the spotlight: government, in the form of the department of public service and administration, negotiated an inflation-busting agreement with the public sector unions that will cost an additional R30-billion over three years. Government, in the form of the treasury, said it cannot afford this and will not make the R30-billion available.

One state entity, the SABC, appears to have got the memo and announced stringent retrenchments to cut back on its R3-billion-plus salary bill.

The medium-term budget included bailouts for SAA (R5-billion), Sanral (R5.8-billion), SA Express (R1.2-billion) and the Post Office (R2.9-billion). In the case of SAA, Mboweni asked whether the country can afford such an enterprise given that it largely benefits the wealthy. Reports suggest that the airline is too costly to close and the chances of finding private money to invest in a flying financial calamity appear slim.

Government appears prepared to have a wider conversation about privatisation, but the condition of some of these enterprises is so dire that it is hard to see private money coming in.