Minutes after the IMF lauded the government on Friday for strengthening governance and private-sector participation in state-owned enterprises, President Jacob Zuma said that loss-making SAA would never be sold.Speaking at the airline's headquarters in Kempton Park on Friday, Zuma said the government was very clear that it would not sell SAA, which has continuously sapped public funds in the form of bailouts, "no matter what other people say".This came after Finance Minister Pravin Gordhan said on Wednesday that he favoured a minority equity partner buying into SAA at "some stage".SAA, which has been placed under National Treasury oversight, has already had state guarantees of R14.4-billion.Zuma's comments coincided with the release of a statement from the IMF on Friday following its review of South Africa.Over two weeks IMF officials met Gordhan, Reserve Bank governor Lesetja Kganyago, Minister in the Presidency Jeff Radebe, Minister of Trade and Industry Rob Davies, Minister of Economic Development Ebrahim Patel, South African Revenue Service commissioner Tom Moyane, Nedlac, Cosatu and business representatives.Reforms of South Africa's state-owned enterprises are among initiatives that the government, business and unions are working on to improve the country's credit outlook and avoid a downgrade.Laura Papi, who led the IMF mission, said the government was making progress in addressing infrastructure bottlenecks, especially in the electricity sector, and had committed to state-owned enterprise reforms. It was also strengthening public procurement.But Papi said "a comprehensive package of structural reforms remains the preferred option to create jobs and reduce inequality. An initial focused set of tangible measures could help generate sustained reform momentum".Papi said 2016 budget targets that Gordhan tabled in parliament in February were "appropriately ambitious", but could be challenging to achieve if the IMF's macroeconomic projections materialised. Heightened monitoring of financial-sector risk is warranted given the weak economy and tightening financial conditions The IMF expects economic growth to contract to 0.6% this year for South Africa and a muted recovery is envisaged from 2017. In comparison the Treasury expected 0.9% growth this year.In the context of lower growth, Gordhan has announced his intention to cut the budget deficit from 3.9% in 2015-16 to 2.4% in 2018-19 and to chop public spending while looking at reforms to induce growth.Axel Schimmelpfennig, senior resident representative for the IMF in South Africa, said: "If growth is indeed lower then, through lower revenues, it will be more difficult for the government to achieve the deficit target that they have set."Papi also noted that the government and Reserve Bank were advancing key financial-sector reforms and that stress tests carried out by the Reserve Bank suggested the banking sector remained resilient."Heightened monitoring of financial-sector risk is warranted, given the weak economy, tightening financial conditions, regulatory changes and extensive linkages between macroeconomic and financial sector developments," said Papi.She also said the Reserve Bank, which she suggested had the space to keep rates on hold for a while until inflation and core inflation rose significantly, could "seize opportunities to build international reserves, especially in the case of large, foreign direct investment-related foreign exchange inflows".Schimmelpfennig said this meant that bigger projects under discussion between the government and the private sector, if these moved forward, would lead to a sizeable inflow of foreign exchange into the country.He said this "would provide the Reserve Bank with an opportunity to consider purchasing foreign reserves."Asked if the initiatives could help South Africa avoid a ratings downgrade, he said: "We don't really have a view on whether that would happen at all."But he said co-operation between the government and private sector, such as in the electricity sector with renewable energy projects which led to a substantial amount of generation capacity, was successful."To us, this example is a demonstration that you can have very effective private-sector participation which will benefit consumers."- With Reuters..