IMF’s 2025 Review: South Africa Has Momentum—but Must Move Faster
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South Africa is making progress, but not nearly fast enough. The National Treasury published the Staff Concluding Statement of the 2025 Article IV Mission conducted by the International Monetary Fund (IMF).
That’s the central message from the IMF, following its 2025 Article IV Consultation, a detailed annual review of the country’s economic performance and policy direction. In its concluding statement released this month, the IMF praised the government for key reforms and institutional strength but raised serious concerns about rising debt, sluggish growth, and the slow pace of implementation. Below is what accountants, finance professionals, and policy watchers need to know.
Wins Worth Celebrating
The IMF acknowledged important achievements over the past year:
Reform momentum in energy and logistics
Eskom unbundling, enhanced private participation in generation, and progress in freight rail and port services are creating signs of relief for businesses.
Exit from the FATF greylist
South Africa’s improved efforts to combat illicit financial flows and strengthen financial regulation earned the country its removal from the grey list.
Lower inflation target adopted
Moving to a 3% midpoint target (within a 1% band) is seen as a strong step toward improving macroeconomic stability and investor confidence.
Resilient financial system
Despite pressure from a growing government debt load, the banking sector remains healthy and well-regulated.
What’s Holding South Africa Back?
Despite signs of progress, the IMF remains concerned about fundamental constraints:
Rising public debt
South Africa’s debt is now above 74% of GDP and is expected to continue growing. Current policies are not sufficient to stabilise it.
Weak economic growth
Projected at just 1% for 2025, growth remains far below what’s needed to reduce unemployment or poverty.
Persistent structural barriers
These include spatial inequality, inefficient public infrastructure, slow service delivery, and red tape that deters small business development.
Poor reform execution
Even where reforms are well-designed, implementation delays undermine their effectiveness.
IMF’s Policy Advice: The Key Takeaways
To regain control of public finances and unlock inclusive growth, the IMF outlined a series of targeted recommendations:
1. Fix Public Finances
Aim for a primary budget surplus of 3% of GDP to reduce debt
Reprioritise public spending toward infrastructure, education, and health
Cut wasteful expenditure and reduce irregular spending
Rationalise public employment and improve wage bill control
Reduce reliance on ad hoc support to SOEs and promote their restructuring or privatisation where feasible.
2. Modernise Tax Policy and Administration
Broaden the tax base by reducing exemptions and improving compliance
Enhance VAT efficiency, reduce administrative loopholes, and consider rate-neutral reforms
Implement carbon, gambling, or health taxes as potential new revenue streams
Strengthen SARS’s digital capacity and data analytics to support enforcement.
3. Accelerate Structural Reforms
Reduce red tape and simplify business registration and licensing processes
Improve labour market flexibility while preserving worker protections
Professionalise public procurement and ensure transparency in tender awards
Address inefficiencies in municipalities that affect service delivery and business operations.
4. Promote Private Sector Growth
Improve access to finance for SMEs through credit guarantees and fintech solutions
Finalise and implement outstanding reforms in the electricity, water, and transport sectors
Reduce policy uncertainty to boost investor confidence
Strengthen public-private partnerships to deliver infrastructure and innovation.
5. Strengthen Governance and Accountability
Prioritise enforcement of anti-corruption laws and prosecutions
Empower oversight institutions with resources and independence
Digitise public services to reduce leakages and improve access
Ensure merit-based appointments in state institutions.
6. Advance Inclusive and Sustainable Development
Improve targeting of social grants to the most vulnerable
Invest in education outcomes and technical training to address youth unemployment
Expand affordable and reliable transport links to improve access to jobs
Promote green growth through carbon pricing and renewable energy investment.
Urgency Is Key
The IMF's final words acknowledge that South Africa has the tools and talent to succeed, but must act decisively.
The reforms are well-known, the frameworks are in place, and there’s growing momentum in some areas. But delays, policy uncertainty, and a reliance on short-term fixes continue to undermine long-term prospects. To create jobs, reduce inequality, and improve living standards, South Africa must now make the leap from planning to implementation. That means embracing private sector-led growth, restoring fiscal credibility, and ensuring that every rand spent delivers value.
The IMF’s recommendations underscore the critical role of CIBA accountants in supporting national development. Promoting compliance, guiding SMEs, driving efficient public and private financial management and advocating for ethical governance, accountants are uniquely positioned to enable the reforms South Africa urgently needs. CIBA continues to champion the idea that accountants are not just number-crunchers, they are economic enablers.
