Aug. 21, 2019
"The IMF's primary mission is to ensure the stability of the international monetary system—the system of exchange rates and international payments that enables countries and their citizens to transact with each other." (source)
Upon the founding of the IMF, its three primary functions were: to oversee the fixed exchange rate arrangements between countries, thus helping national governments manage their exchange rates and allowing these governments to prioritize economic growth, and to provide short-term capital to aid the balance of payments. (source)
Lots of hype (hysteria?) about an IMF bailout for South Africa with all sorts of talking heads weighting in suggesting it is a certainty.
But an IMF bailout is not happening any time soon, the facts are simple and we're a long way off even entering talks about a bailout.
Now sure our economy and stock market are both under pressure but the IMF cares nothing about the latter and the former is struggling but it is a long way from a death spiral.
Bottom line, we're not seeing capital flight so no IMF bailout waiting in the wings.
So why are we seeing all sorts of hysteria headlines saying an IMF bailout is practically a certainty when it patently is not?
Also, why the fear from market friendly economists and the like? All these economists who criticise government for not being market friendly enough would surely love the IMF market friendly conditions for a bailout? Or are they practising double speak?
Both the in country IMF head (Montfort Mlachila) and our own SARB governor (Lesetja Kganyago) state that it is not currently on the table.
Now sure, 'currently not on the table' can change. But which of the above will trigger the change? What else could trigger the change?
Short answer is Eskom, but there are plenty of balance sheet / debt options for Eskom and minister Mboweni says we'll have details soon.
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