This month, David Lipton, first deputy MD of the IMF, delivered what he himself referred to as a blunt message: that the limited progress on structural reform in South Africa would lead to further declines in per capita income and poor employment prospects. Perhaps he spoke bluntly because he had tried to deliver this message before.In a speech last year, he said: "The absence of crucial reforms leaves South Africa vulnerable to sudden shifts in the global economy."Two years earlier, he had stated: "Structural reforms are the key to unlock South Africa's potential."However, in last week's speech, at the Wits Business School, Lipton made an important additional point: "But now the cost of insufficient action has reached the critical point."story_article_left1The message is simple: the time for talk is over. This attitude is also reflected in the actions of the ratings agencies. Just this week, Fitch lowered South Africa's local currency debt rating to just one notch above subinvestment grade: BBB-, matching the foreign currency rating.The National Treasury and the Reserve Bank (both praised by Lipton) have done sterling work in addressing some of the concerns raised by ratings agencies. Remedying these two imbalances in a consumption-driven economy, however, comes at the expense of growth, another critical measure scrutinised by S&P, Fitch and Moody's. There is little more these two state institutions can effectively do given the parameters within which they operate.How, then, to promote faster and more inclusive growth in South Africa?First, it is not as if nothing has been done. There is evidence of progress on certain fronts. For example, electricity output has stabilised and is less of an economic constraint. There is nascent evidence that the Employment Tax Incentive is raising jobs for young people.The efforts of the chief procurement officer in the Treasury and related procurement reforms are also said to be gaining traction. The benefits will be improved effectiveness of government spending, a reduction in corruption and better access to contracts for smaller companies.However, more can be done. The advice from the IMF on what this is boils down to further structural reform, which requires compromise between the government, business and labour. The government must implement policies that encourage domestic and foreign investment into real - as opposed to financial - assets.These, according to the IMF, could include a social bargain on wage restraints in exchange for job retention and hiring commitments, the exemption of small and medium enterprises from collective bargaining agreements, and the improved governance of public corporations.story_article_right2With respect to companies, both private and public, the IMF recommends product market reforms that would allow greater access for new entrants to compete with incumbents across industries. Giving more resources to the Competition Commission to allow it to detect and remedy abusive behaviour by dominant incumbents would also encourage competitiveness.Finally, a concerted effort to reduce crime, which is an enormous constraint on economic activity in townships, would also boost output and job opportunities.The private sector is uncertain about the outlook for South Africa's economy. The consequence is declining private fixed investment. Reforms that make it easier to do business would go a long way to boosting business confidence and trigger a wave of private sector investment. This, in turn, would boost production, foster job creation, and lead to higher tax revenue and GDP growth.The problem now is that each sector is looking to the other, waiting for action.Instead, the government, business and labour all need to show bold leadership and play the long game. Let's hope that Lipton's speech next year will not be "We warned you", but instead something a lot more positive.Nxedlana is FNB's chief economist..