IMF bail-out in SA could have ‘happy ending’

Staff Writer | Aug 05, 2019
Author and political scientist R W Johnson argues that a bail-out from the International Monetary Fund (IMF) would ‘bring down the curtain on a disastrous period of misgovernance and force proper structural reform to be undertaken at last’.

South Africa’s mounting economic crises pointed to the growing likelihood of an IMF bail-out, which would likely ‘have a happy ending’, Johnson writes.

He argues in an article on the political website, Politicsweb, that the country’s gathering economic problems ‘means … that all roads lead to the IMF’.

Johnson says: ‘Doubtless, as we near that point there will be lots of [African National Congress] ANC (and [Economic Freedom Fighters] EFF) speeches tearing into the IMF and all its works and swearing that South Africa will never ask for its help. But their meaning will be quite the opposite, that politicians fear the inevitable, are in denial, and somehow hope that ideological fervour alone will head off that choice. All this should be ignored. The only question that matters is, if you get into a terrible financial mess do you or do you not want help from the lender of last resort? And since the only alternative to the IMF is a breakdown into chaos, do you prefer chaos? There can only be one answer to that.’

He adds: ‘In fact an IMF bail-out will be a happy ending. It will bring down the curtain on a disastrous period of misgovernance and force proper structural reform to be undertaken at last. This won’t exactly be fun but an extra $50 billion or so will help tide things over. Provided that reform is firmly forced through the country should be set once again on a self-sustaining course and, almost certainly, the political landscape will have fundamentally changed.’

It could be that ‘there will be major constitutional revision and the period between 1994 and (say) 2020 will be written off as a failed republic …’.

‘All of which is not bad news. South Africa will remain a resilient country with enormous mineral wealth, a tourist Mecca and a large, potentially valuable diaspora. Of course, it may not remain one country: the longer our current politicians remain in denial, the more likely it is to break up. That is a true unknown. But the fundamentals will remain good and a second chance, a new start, is always a fine thing.’


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