Stimulus and recovery plan not likely to boost economic growth or create jobs in SA
The fact is that President Cyril Ramaphosa’s priority has been to fix the politics, rather than fix the economics, in South Africa.
The “new path” of economic growth, employment and transformation, which was supposed to emerge from a series of summits, conference and dialogues was too little, too late to save the economy from recession.
That is why he was forced to fast forward and announce a “stimulus and recovery plan”, the “central element” of which is the reprioritisation of about R50 billion towards programmes that will boost economic growth and create jobs in South Africa.
However, the impact on economic growth and job creation is likely to be modest given the fact that:
- the R50 billion adjustment amounts to a marginal increase in spending of about six percent on infrastructure over the medium term;
- the R50 billion adjustment is not “new money” and will be funded by repriortising expenditure within the existing budget over the medium term between 2018/19 and 2020/21.
The fact is that the R400 billion that will be allocated to the infrastructure fund is also not “new money” and has already been allocated to expenditure on public infrastructure in the existing budget over the medium term between 2018/19 and 2020/21.
The “stimulus and recovery plan” is aimed at speeding up the implementation of existing economic policies, rather than introducing new economic policies, such as exempting small businesses employing fewer than 250 employees from complying with restrictive labour legislation, other than the basic conditions of employment, in South Africa.
In the end, the “stimulus and recovery plan” is likely to have a modest effect on economic growth and job creation, and it is likely to be compromised by reckless economic policy proposals being considered, such as the formation of state banks, land expropriation without compensation and the nationalisation of the reserve bank in South Africa.
Statement issued by David Maynier MP, DA Shadow Minister of Finance, 21 September 2018