The International Monetary Fund (IMF) has bemoaned the impact of the ongoing electricity crisis on the South African fiscus as the mining industry misses out on the global commodity boom.
The IMF said that though its latest assessment of South Africa’s outlook was a little bit behind the curve, the problems with electricity production had really constrained the country’s productive sectors.
This comes as Eskom suspended its rotational power cuts for the first time in a month since it started implementing various levels of loadshedding due to ongoing supply challenges to meet demand.
Meanwhile, power utility has informed businesses to brace for regular power cuts over the next 18 months at least, as it suggested a regular Stage 2 loadshedding regime, which the country can plan around.
IMF director for African Department Abebe Aemro Selassie said they viewed South Africa as a country that has been impacted quite a bit by global economic conditions and pressures on financial markets.
However, Selassie said this was compounded by more internal challenges the country was facing.
“And this is all a little bit unfortunate because with high commodity prices we are seeing globally, this would have been a moment where if South Africa was in a better position, it could have exploited and benefited quite a bit from this,” Selassie said.
South Africa has missed the train of the commodity cycle as the export commodity price basket has come down from earlier peaks and is now forecast to rise by 2.3% for the year, down from 3.2%.
As a result of these export and import developments, the current account balance is expected to register a surplus of 0.2% of gross domestic product this year before falling to a deficit of 1.0% in 2023.
In the 2021/22 financial year, mining contributed R127 billion to the fiscus out of total corporate income tax of R318bn.
Selassie said that South Africa needed to strengthen the floundering supply-side of its economy as it was dragging down any growth potential.
“In terms of policy priorities, [South Africa] remains to make sure that the supply-side of the economy continues to be as robust and healthy as possible,” he said.