B4SA sees R1trn GDP boost from reforms

SA’s biggest business grouping proposed 12 key focus areas that could add R1 trillion to gross domestic product (GDP) and help the economy overcome the damage wrought by the coronavirus pandemic and restrictions to curb its spread.

The projects, which include ensuring affordable electricity supply, allocating digital spectrum and improving port, railroad and water infrastructure, could also generate 1.5 million jobs and increase tax revenue by

R100 billion a year, Business for South Africa said yesterday. Its members include Business Unity South Africa, Business Leadership South Africa, the Black Business Council and Banking Association of South Africa.

The proposals are being made with the economy expected to contract between 8% to 10% in 2020, the group said. SA imposed a strict lockdown aimed at limiting the spread of the virus on 27 March. That shuttered all activity in the R5.1 trillion economy except essential services for five weeks before a gradual, phased re-opening started.

Its recovery plan will require R3.4 trillion in funding over the next three years, which could push public-sector debt to over R6.4 trillion during the period, B4SA said.

“This funding need cannot be met by domestic sources, nor is it possible for the South African Reserve Bank to address the shortfall in a responsible and sustainable manner through monetary measures,” the lobby group said.

The private sector should help finance and develop economic infrastructure in a regulated and competitive environment.

In the absence of growth-enhancing structural reforms, government debt will top 100% of GDP in 2023, B4SA said.

The National Treasury expects gross debt-to-GDP to likely peak at 87.4% in 2023-24 under an “active” management scenario that it is pursuing.

– Bloomberg