IMF cautions on expropriation without compensation

The International Monetary Fund (IMF) has welcomed South African President Cyril Ramaphosa’s measures to turn the country around in an effort to create jobs, and reduce inequality and poverty. But a Cape Argus report says the global lender warned that the raging land debate in the country was creating policy uncertainty on property rights and discrediting SA’s stated need for foreign investment. Last week, the IMF released its annual Article IV report following consultations with SA between May and last month. The fund’s executive board said it welcomed measures announced by Ramaphosa to reignite the economy of the country. Deepening the fight against corruption, reducing the government’s high wage bill and containing the state’s rising debt are some of the measures that the IMF has recommended to Ramaphosa’s administration. But the IMF issued a warning on land, pointing out that the land debate was undermining the credibility of the government’s stated priorities to attract investment. ‘In line with best international experience, land reform should focus on enhancing agricultural productivity, improving land administration to strengthen security of tenure, and reducing poverty. At the same time, there is a need to mitigate any potential negative effects of land reform on the agricultural base and the financial spill-overs from changes in the value of land as collateral,’ the report said. The IMF said the government would have to finely balance both social and economic considerations when deciding the type of land to be redistributed, pointing out that expropriating land without compensating its owners would however potentially turn away investors.