JOHANNESBURG - South Africa's electricity crisis is threatening its fiscal health and ability to provide adequate public services.
The International Monetary Fund is warning that Eskom must reduce its reliance on government support.
The IMF has cut South Africa’s GDP growth outlook to a paltry 0.1-percent for this year.
The IMF's Paulo Medas said, "yes, the problems on the energy sector and electricity company has an effect on the budget and the debt through two ways. One, indirect, because it affects economic growth and tax revenues. That undermines the fiscal accounts."
"And direct, because the company requires government support and that is reflected in our projections for the debt numbers. So the solution has to be to address structurally the problems in the sector, which will contribute to higher growth, and reduce the need of future government support."