Think-tank hits back at IMF ‘austerity measures’ for SA

The Alternative Information and Development Centre claimed the global financial institution was proposing regressive reforms which did not address the country’s pandemic levels of poverty, inequality and unemployment.

The IMF report concluded that “with delays in structural reforms, growth and social conditions will worsen”, said Dominic Brown, the centre’s economic justice programme manager.

“However, the tried and tested reforms its report proposes are at the centre of the ills faced in SA and around the world today.”

The report, which followed a three-week visit to SA, pointed out major risks to the country’s stability, including weak economic growth and risks of further credit rating downgrades, but warned that government had already introduced economic reforms – included greater cuts in government spending, increased privatisation and more attacks on organised labour.

Should government decide to dance to the IMF tune, said Brown, the hardships experienced by the more than 55% of the population would get worse.

He said such reforms would only serve to exacerbate unemployment, inequality and all the social ills directly linked to these socioeconomic problems.

The IMF recommended SA create an environment friendly to private sector investment and take a decisive approach to implement structural reforms in order to boost economic growth.

According to Finance Minister Tito Mboweni this week, Treasury had undertaken interventions since the IMF’s May visit, including the approval of the Integrated Resources Plan, a simplified visa regime and the scrapping of a requirement for unabridged birth certificates for children entering the country.

“What the IMF is proposing is extreme austerity,” Brown said. “They propose ‘fiscal consolidation’ by 3% of GDP [gross domestic product].

“As no fast improvement of tax collections can be assumed, that is some R150 billion to R180 billion less for education, health and other essential services.

“Worse, it would send the economy into recession, workers would be laid off at even greater numbers. It would represent a social disaster. A kind of tsunami that would hit the poor of this country.”

Economists argue that austerity, now called fiscal adjustment – a reminder of the structural adjustment programmes imposed on Africa in the 1970s and 1980s – results in the contraction of the economy, increased unemployment and inequality.

For more news your way, download The Citizen’s app for iOS and Android.