The International Monetary Fund (IMF) said on Friday that South Africa's economic recovery remains fragile and growth is expected to remain below 2% over the medium term due to political uncertainty, high public debt and investment constraints.

"The economic recovery is considered fragile as it was accompanied by worsening unemployment, weak bank lending to the private sector, and anemic private investment. Despite the revival of growth, poverty and inequality have shown no signs of improvement," the IMF said.

In a note issued at the end of discussions with South Africa, the IMF said that the country's recovery from the covid-19 pandemic had been faster than expected, but that its durability remained uncertain.

By contrast, South Africa responded by saying that it was "slightly more optimistic" than the IMF about medium-term growth prospects, seeing a gradual recovery in investment and confidence.

The South African National Treasury also said it was committed to putting public debt on a downward trajectory and reducing budget deficits.

The IMF forecasts South Africa's economic growth at 1.9% in 2022, following an estimated recovery to 4.6% in 2021, but sees a decline to 1.4% in the medium term.

IMF directors praised the South African government for a strong policy response to the pandemic, but outlined a variety of areas that require improvement.

The upcoming February 23 budget provided an opportunity for concrete measures to rein in public sector salaries, rationalize state enterprise bailouts, tax expenditures, and better target education subsidies.