By Bekezela Phakathi with Andries Mahlangu for Business Day
The government will reprioritise about R50bn within its existing budget to reignite economic growth and create jobs, President Cyril Ramaphosa said last Friday.
Presenting the government’s much-anticipated grand plan to kick-start SA’s stalling economy, Ramaphosa also announced the establishment of an infrastructure fund that is a core part of the package. He said R400bn will be leveraged from various development finance institutions, pension funds and ordinary investors, among others over the medium term to drive the infrastructure fund.
“We are establishing a dedicated infrastructure team in the presidency that has project management and engineering skills which will identify shovel-ready public sector projects such as roads and dams,” Ramaphosa said during a briefing at the Union Buildings.
“We have limited fiscal space to increase spending or increase borrowing … we do not have have fiscal space to pour money in the economy … we have to resort to re-prioritising our spending and budget within the current fiscal frame work,” the president said.
The package also includes the new Mining Charter, major changes to visa requirements to boost the tourism sector, the development of industrial parks and township businesses, and reforms in the telecommunications industry, particularly the release of spectrum to create competition and drive down the cost of data.
“The stimulus package consists of a range of measures, financial and non-financial, to ignite economic activity and restore investor confidence, and prevent further job losses, and create new jobs,” Ramaphosa said.
The measures give priority to those sectors that can revive the economy, including agriculture.
Ramaphosa said more details on how the budget will be reprioritised will be provided when finance minister Nhlanhla Nene presents the medium-term budget policy statement. Nene said most of the funds for the stimulus package would be moved from under-performing departments.
Ramaphosa first proposed the stimulus package in July, in a bid to boost SA’s sluggish economy and tackle the unemployment crisis, which at just more than 27% remains a major headache for the government more than two decades since the official fall of apartheid. However, Ramaphosa’s plan to reignite growth was dealt a heavy blow with shock second-quarter GDP data indicating that SA had entered a technical recession.
The rand extended gains and government borrowing costs fell following the speech. The rand was at R14.22 against the dollar, its best level in about four weeks, while the yield on the benchmark R186 bond was at 9.03% from 9.08%.