Kganyago warns of IMF bailout risk amid political shifts in SA

South Africa's central bank governor, Lesetja Kganyago, warns the next government to manage limited resources or risk needing an IMF bailout. Amid political shifts, including potential coalitions and nationalization talks, Kganyago highlights the financial impracticalities of nationalizing banks, which could double government debt. With debt already high, he stresses the necessity of prudent fiscal management to avoid severe IMF-imposed austerity measures..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.. By Adelaide Changole.South Africa's central bank chief said the next government will need to accept it has limited resources or risk having to go to the International Monetary Fund for a bailout. .___STEADY_PAYWALL___.The African National Congress is weighing options from partnering with the centrist Democratic Alliance to leftist parties to forming a government of national unity, after losing its outright majority in May 29 elections..Both the Economic Freedom Fighters and former President Jacob Zuma's uMkhonto weSizwe Party in their manifestos said they want to nationalize mines and banks..The parties might say that want to nationalize banks, but until that becomes government policy we will not have to respond, Governor Lesetja Kganyago told an event in Johannesburg for the release of the biannual Financial Stability Review on Wednesday. .Lesetja Kganyago Photographer: Waldo Swiegers/Bloomberg.Read More: S. Africa's Shallower Markets Pose Pricing Risks, SARB Says ."If government somehow nationalizes all of these banks, this government will have to borrow a lot of money cause these banks are not particularly cheap at the moment and you are not going to take them for free," Kganyago said. "Government would easily more than double its debt just to buy the banks." .The government's debt to gross domestic product estimated at 74.1% for this fiscal year is already much higher than the emerging market average..Kganyago said the government will need to consider tradeoffs. ."At the end of the day when you govern, you are going to face the reality that you only have so much resources to work with," the governor said. "If you try to do things beyond those resources, you are going to end up having to pay for it and it'll not take long before the funders start saying, I am not funding you anymore.".When that happens you will be left with only one funder who will come to the party – the IMF, Kganyago said. "They know one thing when they come, they will teach you how to budget and they'll make you to live within your resources and it's going to be painful. And you know what? You might not have to drink the medicine. You might have to undergo surgery.".Read also:.🔒 Hartford: SA's left surges in 'New Dawn' for radical ideologies amidst political shifts🔒 FT – Navigating the postmodern cycle: Investors brace for shifts amidst geopolitical tensions and AI impactIMF slashes South Africa's growth forecast to 1% amid logistical challenges.© 2024 Bloomberg L.P.

Kganyago warns of IMF bailout risk amid political shifts in SA

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