Lagarde: SA at a crossroads

South Africa has immense potential, but it is at a crossroads, Christine Lagarde, managing director of the International Monetary Fund (IMF) said in a statement at the conclusion of her visit to the country on Thursday.

"SA has immense economic potential, including a young and dynamic population. The country has made substantial progress over the past quarter of a century, achieving much improved living standards for its citizens. There is a lot to be proud of," said Lagarde.

"At the same time, South Africa is at crossroads. The country faces challenges to raise growth and create more jobs, particularly for the youth. It also needs to address the too-high levels of unemployment, poverty, and inequality."

In her view, it is a matter of urgency to advance broad-based reforms to "reignite growth and ensure that all South Africans share the benefits, irrespective of their race, age or gender."

She said this needed to take place against a very challenging external environment for emerging markets, and called for "increased vigilance and rebuilding of policy buffers".

Attract investment

She stressed that it was important to foster competition in the SA economy to attract private investment.

"There is also a need to strengthen public finances to stabilise debt at more comfortable levels by making expenditure more efficient, growth-friendly and inclusive," she said.

Additionally, improving the operational efficiency and financial situation of state-owned enterprises to raise competitiveness and contain fiscal risk is essential, in her view.

Lastly, she said priorities should be improving financial inclusion; and continuing to identify and address corruption through increased transparency, accountability and the rule of law.

"I agreed with the authorities to enhance the excellent policy dialogue that we have together," she said.

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