Power cuts will add to pandemic woes for SA's ailing economy - IMF

The coronavirus has hit SA's already ailing economy hard and power cuts by state-owned utility Eskom will likely make things worse, the International Monetary Fund (IMF) said on Wednesday.

The global lender in 2020 approved a $4.3bn emergency loan for SA.

Africa's most advanced economy was already in recession before the coronavirus struck. It also has the continent's most infections, with more than 1.4 million cases and close to 42,000 deaths to date.

The IMF forecasts a contraction of 7.5% in 2020 GDP, while 2021 growth is seen at only 2.8%.

In a statement following the end of two weeks of virtual meetings with SA authorities, the lender warned that a return of nationwide electricity outages by debt-laden state utility Eskom would put further pressure on growth and public finances.

"Recurring power outages in the midst of a deep recession underscore the need for bold action to redefine Eskom’s business model so that it becomes self-sustaining," the IMF said.

"Reining in large fiscal deficits and debt will require containing the public wage bill and avoiding ill-targeted subsidies and transfers to inefficient state-owned enterprises."