Government to unveil stimulus package

Thursday, September 6, 2018

President Cyril Ramaphosa will shortly present a stimulus package aimed at rousing economic growth, Communications Minister Nomvula Mokonyane said on Thursday.

“We will be presenting it within a short period of time and that would also be followed by information on our areas of investment not only foreign direct investment (FDI) but also the promotion of domestic investment and the collaboration that has already started to unfold,” said the Minister.

Mokonyane was responding to a question at a post Cabinet media briefing held in Pretoria.

Briefing the media, she said government will go into other important meetings that will “look at the costing of all of these interventions that we are putting together”.

Data released by Statistics South Africa (Stats SA) on Tuesday showed that the economy slipped into a technical recession in the second quarter.

Gross Domestic Product (GDP) figures for the second quarter of 2018 showed that the economy slipped into recession. According to data released by Statistics South Africa (Stats SA), the economy shrunk by 0.7% quarter-on-quarter following a revised 2.6% contraction in the first quarter of 2018.

The widely recognised indicator of recession is two (or more) consecutive quarters of negative growth.

At the briefing, Mokonyane admitted that while other factors related to the economy are within government’s there are others that go beyond government’s control.

“Of course there are processes that take time to yield results, we definitely have to deal with balancing all those matters -- our intention is to make sure that no one suffers,” she said.

In its reaction to the country slipping into a technical recession, Cabinet called on all sectors of the country to rally behind government-led initiatives to boost economic growth.

Although some sectors of the economy, such as mining, construction and finance, recorded an improvement in growth, this was insufficient to offset fully the contraction in other sectors, in particular the agricultural sector. 

Mokonyane said government is “quite concerned and protective” about the agriculture and mining sectors.

“The rising volatility in global markets and the GDP outcome require that government accelerates efforts to unblock constraints to economic growth while providing support to vulnerable groups,” said Cabinet.

Cabinet also noted that over the last four years, economic growth has slowed down significantly, reflecting factors such as drought conditions in the agricultural sector.

Other factors include low commodity prices and domestic structural constraints which have discouraged investment and employment creation.

“Cabinet affirms government’s commitment to fiscal sustainability and a revised fiscal framework will be presented in the Medium Term Budget Policy Statement (MTBPS),” said Cabinet.

Finance Minister Nhlanhla Nene is expected to table the MTBPS which is also known as the mini-budget in Parliament next month.

Speaking to SAnews earlier this week, Bureau of Economic Research (BER) senior economist Hugo Pienaar, who has forecasted that the South African economy will come out of the recession in the third quarter, said it is likely that economic growth will be weaker this year than last year.

The national Budget tabled in February forecasted growth to come in at 1.5% for 2018.

Visa system overhaul to support economic growth

The Minister said government has committed, to amongst others, a complete overhaul of the visa system to support the tourism sector, the finalisation of key mining legislation to support the mining sector and further stabilise the finances of state-owned companies.

An inter-ministerial team is looking at various aspects of the visa issue. “That has been identified as one of the immediate things that are within the control of government and government can be in a position to resolve those.

“We also know that we have relationships with other countries where, particularly in tourism [where] visas are not a requirement. We also need to look at those kind of matters that are of concern including those who intend to come and invest in South Africa,” she said.

Cabinet said the upcoming job and investment summits, as well as the proposed government stimulus package, will provide details on reforms needed to drive growth. –