ANC to outline steps to lift economy

The ANC, whose infighting over economic policy has contributed to the slide in business confidence to its lowest levels since the 1980s, will outline immediate interventions to boost SA’s ailing economy following a meeting of its highest decisionmaking body at the weekend.

The national executive committee (NEC) meeting came as the Treasury reported deteriorating revenue and expenditure figures on Monday, reinforcing economists’ expectations of a substantial worsening in the budget deficit and debt levels in the medium-term budget policy statement.

Finance minister Tito Mboweni, whose contested economic recovery document was on the agenda, is due to present his medium-term budget policy statement later in October, which is expected to show the full effects of stagnant economic growth on tax revenues and expose SA’s fiscal constraints as it battles financial crises at stateowned companies.

ANC spokesperson Pule Mabe said the party would on Wednesday announce plans which would “effectively deal with economic stimulation”.

“We are quite confident that arising out of the deliberations it is now all hands on deck,” Mabe said.

Nearly five months after an election that was meant to reinforce his reformist credentials, President Cyril Ramaphosa has faced calls from business leaders to enact changes needed to improve the investment climate.

Two business confidence indicators in September painted a grim picture, suggesting the post-election optimism is all but gone.

Analysts have cited Ramaphosa’s tenuous grip on power as the reason for failing to push through unpopular policy

R50bn to R60bn

the expected shortage in revenue collections compared to what was forecast in February’s budget

reforms as he grapples with a faction within the ANC that still backs his predecessor Jacob Zuma’s vaguely defined radical economic transformation policy.

The ANC’s national executive committee spent Sunday focusing on economic issues, with Mboweni’s economic growth strategy document taking centre stage.

The economic plan is unlikely to be adopted as is, with trade union federation Cosatu and the SACP opposing some of the proposed reforms.

Mboweni released his plan for discussion in August.

Stanlib chief economic Kevin Lings said the adjustments in October were likely to be a “step change for the worse”. Revenue collections are expected to be R50bn-R60bn short was forecast in February of’ s what budget, according to Lings.

On Monday, the Treasury reported its revenue and expenditure figure for August, revealing that the deficit for the year to date had risen to R189.4bn, a R58bn increase on the deficit for the same period in 2018.

Mboweni emphasised to the NEC that “spending shocks” were placing the fiscus under pressure, with rising debt service costs displacing real spending and the public wage bill was squeezing out spending on investment, goods and services.

He warned of low growth and said if SA was to shift into a higher growth gear, it needed a clear vision for the economy and a change in attitude to growth. This included selling stateowned enterprises (SOEs) with no clear public service mandate, and rethinking the rationale of state intervention.

Mboweni said SOEs, e-tolls, the National Health Insurance and the Road Accident Fund were placing demands on the fiscus. He warned that reliance on tax increases and more state spending could reduce growth if it deterred investment.

He said there were a number of critical interventions mentioned in the Treasury growth document that were necessary for more sustained and inclusive growth.

This included supporting labour-intensive sectors, SOE reform and enhancing state capacity, Mboweni said.