The South African government has considerable experience dealing with the IMF,
which regularly visits each of its member states to consult about the state of its
economy— the most recent IMF mission visited South Africa in early November.
However, it is over 20 years since South Africa negotiated a financing arrangement with the IMF.
Unless challenged, the IMF is likely to condition its financial support on a standard recipe of reforms. However, over time the IMF has become more amenable to
supporting the programmes proposed by its member states. It has learned that, while
there are similarities between macro-economic crises in different countries, there is
more than one strategy for resolving such crises. In fact, the optimal solution depends
on each country’s institutional arrangements, history, economic, social, environmental
and political characteristics. It also depends on the impact of macro-economic policies
on such social factors as gender, equity and environmental and social sustainability.
Yanis Varoufakis, former Greek finance minister, reports in his book on his experiences negotiating with Greece’s creditors that countries like Poland, through careful planning and shrewd negotiations, were able to convince the IMF to follow their plan rather
than the IMF’s standard approach. His book also shows that the cost of failing to
prepare adequately for negotiations like these can be very high indeed.
So, what should South Africa do to ensure that it gets the best possible deal?
First, South Africa must establish clear and realistic objectives for the plan that it wants the IMF to support.
Second, it must get its diplomatic ducks in a row so that it can strike the best possible
deal.
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