The IMF can do what the ANC can't

Chris_the_Brit

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In a recent article in Business Day (8 August) Peter Bruce took issue with my PoliticsWeb piece of 1 August (“Our Coming Train Crash”) in which I argued that for South Africa now “all roads lead to the IMF”. I went on to say that this was not undesirable since it would mean that the necessary structural reforms would be forced through and this would cause a fundamental re-orientation of South Africa’s economy and politics.

In another apparent response the Reserve Bank Governor, Mr Lesetja Kganyago, argued that South Africa could avoid an IMF bail-out: “We don’t have to get there. These problems are within our grasp, we know exactly what must be done.” As Fin24 put it (August 8), “He added that the government would need to take bitter medicine in order to prevent matters from spiralling out of control.”

Mr Bruce also wants the ANC to act without the spur of the IMF but his argument is different:

“No one should want the IMF in here. Cost cuts and labour market reforms are just the beginning of a restructuring. The political effect is frightening...the ANC shrivels and the EFF grows. An IMF bailout 100% fuels populism.”

The first thing to note here is the deliberate and studied vagueness with which both these gentlemen refer to the things that need to be done. This is very much in line with the Presidency and the Treasury, both of whom talk about the need for “tough measures” and “hard choices” but never get round to telling us what these are. Mr Kganyago simply refers to “bitter medicine”, while Bruce mentions cost cuts and labour market reforms but says these “are just the beginning”, without somehow being able to tell us more.

If you think about it, what this means is that the government, both these gentlemen and, indeed, various businessmen who have inveighed about the need for (unspecified) hard decisions, are all somewhat nervous about actually speaking aloud about what needs to be done. If you reflect on this general timidity you realise that all these parties – including the government – are anxious not to have their names associated with the list of reforms which come under the heading of What Is To Be Done. To be fair, the cases are different. Mr Kganyago and a businessman like, say, Mike Brown of Nedbank, are under clear professional constraints not to fully speak their minds. Mr Bruce, on the other hand, is free to speak the unvarnished truth.

But if everyone is scared even to mention what restructuring means, what real chance is there that the government will actually name all these reforms, take responsibility for them and drive them through? I certainly wouldn’t put any money on that. If any of these gentlemen wish to place a bet with me on this, I will happily take it. But if I am right about this then it means that Messrs Bruce, Kganyago and not a few others, are in denial. They want to keep suggesting that the government can and will act simply because the alternative makes them very uncomfortable. Come now, gentlemen, this is not speaking truth to power or even to yourselves.

I have in fact spelt out very fully the list of necessary reforms in Fighting for the Dream (2019) and, indeed, before that in How Long Will South Africa Survive ? (2015 and 2017). I am aware that this is not comfortable reading for many but, for the life of me, I cannot see why one should be bothered to write anything at all if one doesn’t try to tell the whole truth as far as one is able. We only get one life after all. This is not a dress rehearsal. Why waste one’s time?

However, let me summarise again. We need to get rid of affirmative action, BEE and EWC. We also need to privatize many, probably most, of the SOEs and to liberalise the labour market so as to let the ten million unemployed compete for jobs. Why are wages for textile workers more than ten times higher in South Africa than they are in Ethiopia? The result of that is that the Ethiopian textile industry thrives and employs many thousands of people, while ours is dead. We also need to cut our civil service and public sector wage bill pretty drastically by a mixture of redundancies and wage freezes.
Read more: https://www.politicsweb.co.za/opinion/the-imf-can-do-what-the-anc-cant
 

R13...

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Peter Bruce is unfortunately correct that IMF bailouts fuel populism, so the likes of the EFF would grow and could even end up in power leaving us in a hole we'll never climb out of.

I wonder if that's partly why they're part of the fight back campaign to unseat ramaphosa. Parties like those thrive and benefit handsomely in chaos where the poor get poorer while they profess to champion them all the while getting fat off state coffers.
 

eg2505

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Peter Bruce is unfortunately correct that IMF bailouts fuel populism, so the likes of the EFF would grow and could even end up in power leaving us in a hole we'll never climb out of.
were already in a hole we cant climb out of

or is that the negative news media talking?
 

NarrowBandFtw

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I went on to say that this was not undesirable since it would mean that the necessary structural reforms would be forced through and this would cause a fundamental re-orientation of South Africa’s economy and politics.
yeah it has worked wonders for Greece ... oh ... wait ...

Come to think of it, how many (any?) countries that ruined themselves and then got an IMF loan has actually turned things around?

Sad day when your government is so pathetic that even the IMF seems like a better option. Thanks ANC!
 

Nicodeamus

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The IMF bailout did help to restruction Kazakstan and Tanzania. I would grant that they were at a different place of development than us and that the political dynamics are different.

My view is that SA requires significant restructuring in terms of our political system (i.e. implement van Zyl Slabert's electoral reforms) and in terms of our economy (a reduced regulatory enironment and more property rights)
 

thestaggy

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No good will come of an IMF bailout when the parties responsible for turning the country around are the ANC and next in line, the EFF.

ANC actions and policies got us here so they won't get us out and the EFF are just a bunch of degenerates that would bankrupt a spaza shop in two days.
 

ɹǝuuᴉM

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were already in a hole we cant climb out of

or is that the negative news media talking?
R13... + his clones can safely be ignored. South Africa needs to stabilised the currency by increasing interest rates. But the ANC will never do that. Actually they will do exactly the opposite. When the big wheel of inflation has started turning, it will be impossible to stop. By than even the most optimistic will have to accept the unavoidable faith.
 

Nicodeamus

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No good will come of an IMF bailout when the parties responsible for turning the country around are the ANC and next in line, the EFF.

ANC actions and policies got us here so they won't get us out and the EFF are just a bunch of degenerates that would bankrupt a spaza shop in two days.
With an IMF bailout you will lose control over your fiscal policy, basically it undermines the parliament. It would mean the end of the ANC as one of the conditions that will be imposes is reform of the labour market.

I don't want to be around though when Cosatu gets shafted by policy.
 

Moto Guzzi

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Capitalism, the dissipline, selfdissipline, foresight, common sense and logic that goes with it, is poorly understood to gurantee long term success, so either the polititians or the voters or both are going to learn from this 5-Ties fiasko playout.

This ship cannot be turned around in 5 years/short term due to the magnitude or REDTAPE written to the books.
SA must have one of the largest RedTape container ships on the planet. It requires 3 submarines to dock it.
 
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Chris_the_Brit

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Peter Bruce is unfortunately correct that IMF bailouts fuel populism, so the likes of the EFF would grow and could even end up in power leaving us in a hole we'll never climb out of.

I wonder if that's partly why they're part of the fight back campaign to unseat ramaphosa. Parties like those thrive and benefit handsomely in chaos where the poor get poorer while they profess to champion them all the while getting fat off state coffers.
As my dad said yesterday, the primary objective of the EFF is to cause chaos within the ANC.

Hence before Zuma was removed, they were anti-Zuma.
Now that Ramaphosa is the head, they are anti-Ramaphosa.
 

shanezn186

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As my dad said yesterday, the primary objective of the EFF is to cause chaos within the ANC.

Hence before Zuma was removed, they were anti-Zuma.
Now that Ramaphosa is the head, they are anti-Ramaphosa.
No ****. I think they are anti SA as well.
 

Tander

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All this talk about an IMF bailout; how likely is that to happen in any case though?
 

Zoomzoom

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We need massive deregulation. It's all very well having everything structured like we are a wealthy first world country with first world problems, but we aren't. People need to be able to build houses without (and yes cue the people who are going scream safety blah blah - dudes - house deregulation not all building codes! Anything bigger than say 100m2 must be to code, but small dwellings - let's get an entire industry going with small home builds for heaven's sake. It would take massive pressure off RDP funding and let people get that necessary foot on the home ownership rung.)

The bloody unions need to be reigned in. They have single handedly destroyed so many business sectors in SA. Protect workers rights but not at the expense of entire industries.

Government spending on itself has to brought under control. Government is insanely overpaid from municipal level up. Reinstitute the notion of government work as a service to the country - which attracts people who aren't in it for the money (bad for everyone) and draws people who want to give to the country (good).

The solution to Eskom is not price increases. One of the problems is that they don't sell enough electricity - well duh! When the price goes up beyond what people can afford, the first thing they do is cut back on consumption. And every year the price just goes up! How much business has been lost due to problems with Eskom? I know there have been massive investment projects that have been cancelled because the power supply wasn't up to the task. Cut the costs, make sure there is regular supply. Bloody prosecute the hell out of anyone caught stealing, breaking stuff, cheating the supply chain and any of the other problems that lead to loadshedding.

DO something about crime! Fix the police, fix the prevailing attitudes, fix the damn unemployment. Get an entrepreneurial spirit going! Something anything. Crime massively impacts tourism and tourism is a major income earner for the country.

You can go through government and the economy sector by sector and sort things out - none of this is exactly rocket science - but the people who are supposed to be doing this have their heads up their ideological backsides. Stop with the neo-Marxist quasi-revolutionary bullsh-t - no-one but no-one gives a flying f-ck anymore. EVERYONE just wants things to bloody work, to have a job, a roof, food and more opportunities for their kids than they had. Maslow's hierarchy of needs stuff.
 

flippakitten

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All this talk about an IMF bailout; how likely is that to happen in any case though?
Well, I'm going to say next year as that's what Johan Rupert points to and he's probably a good person to take a warning from.

If not next year, before 2026 (sooner rather than later) as the unaffordable burden of NHI, Eskom, SAA, SASSA grants etc... collapse our already broken economy. On the ANC's current trajectory there is no other possible outcome but then again, it's most likely their plan.

One conciliation is going to be watching the ANC fight each other with for what's left, which will most likely be focused around mining, the true aim of WMC.
 

yebocan

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As my dad said yesterday, the primary objective of the EFF is to cause chaos within the ANC.

Hence before Zuma was removed, they were anti-Zuma.
Now that Ramaphosa is the head, they are anti-Ramaphosa.
and yet, before they were anti Zuma..they were "will kill for Zuma" you attach way too much sophistication to them
The primary objective of the EFF is to ensure that they, the leadership, continue living the lifestyle that gets funded by all their "revenue streams" that they are hellbent of defending ,keep flowing and broaden/multiply. Hence, their hardon for PG....or anything that tries to interfere. Wait till the NPA comes knocking,...ideal way to feed their Indian cabal narrative.
 

smc

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Take a look at what happened to Argentina yesterday before you wish for a IMF bailout.

Even if the IMF's "recipe" is correct in any particular case, and the evidence on that isn't great, IMF structural reform programs don't stick if the reforms aren't supported (or at least believed to be necessary) by a reasonable proportion of the population. That would be highly unlikely to be the case in South Africa.
 
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