Plan to reboot SA economy needed – Cyril

SA needs to do what other nations do in times of economic weakness and come up with a recovery plan that grabs the imagination of investors and its people, Deputy President Cyril Ramaphosa said.

In his first comments since the release of Finance Minister Malusi Gigaba’s mid-term budget last week, Ramaphosa described the SA economy as “moribund”. He added: “We are facing a new situation. A number of economies around us are growing, the world economy is responding very positively in terms of growth, but we are moribund and we need to come up with a plan that takes us out of this.”

The rand slid to the lowest in almost a year after Gigaba painted a bleak picture of the state of SA’s finances, with the economy set to expand 0.7% this year, down from 1.3% predicted in the February budget.

Yields on the nation’s bonds also rose as the projections raised the risk of further credit-rating downgrades, with the nation’s debt already rated junk by S&P Global Ratings and Fitch Ratings.

Lower growth and revenue will feed through to a higher budget deficit. The gap is expected to jump to 4.3% of GDP this fiscal year, up from a projected 3.1%. The shortfall will probably stay at 3.9% of GDP for the next three years. The National Treasury had pledged to narrow the deficit.

“We have almost been facing an investment strike,” he said. “Companies are not investing in our economy. They are concerned about the political instability. So we have to reboot our economy.” – Bloomberg

Picture: Shutterstock The rand recovered on Friday after two days of heavy losses sparked by a bleak budget, benefiting from an uptick in other emerging market currencies and helped by local exporters selling dollars. However, an RMB currency trader said it’s far from...