Finance Minister Malusi Gigaba on Thursday unveiled details of his inclusive economic growth action plan, which is set to inspire confidence in the country.
“The programme we are presenting today is drawn from our engagements with the rating agencies, domestic and international investors, [and takes into consideration] the technical recession.
“We’ve heard the issues they have raised and we have applied our minds to what we need to do in order to restore our investment grade over a period of time to stave off any further downgrade and to reignite growth in the economy by boosting confidence and investments,” said Minister Gigaba.
Briefing reporters at the Johannesburg Stock Exchange (JSE) on details of government’s inclusive economic growth action plan, Minister Gigaba said government has made a commitment that the plan will be made public.
While rating agencies and the like may not be aware of the details of the plan, said the Minister, the plan is detailed enough to inspire confidence.
“We had made a commitment, though they don’t know the detail. It may not be a perfect plan but it is detailed enough to inspire confidence,” he said.
Minister Gigaba said government has been deeply engaged with the country’s low economic growth and its recent fall into recession in the first quarter of 2017. Government has been analysing its impact on social welfare, and considering an appropriate response.
This has led to several engagements in Cabinet and amongst the Economic Cluster Ministers to craft an appropriate government response. President Jacob Zuma also held a meeting with several Ministers on 28 June.
President Zuma stressed the urgency of a coordinated response. An agreement was reached on implementation timelines for key structural reforms related to the Nine-Point Plan to boost the economy and create jobs.
The growth action plan, with several interventions and timelines, will be unpacked at the upcoming Medium Term Budget Policy Statement (MTBPS) in October and the 2018 Budget, Minister Gigaba.
The plan covers 14 areas of intervention. One area relating to fiscal policy is the finalisation of a sustainable wage agreement, which has been assigned to the Minister of Public Service and Administration. The envisaged deadline for this is February 2018.
Another intervention noted in the plan is the recapitalisation of State owned Entities (SOEs) and government guarantees. This, Minister Gigaba said, would be based on continuing engagements on a framework for the disposal of non-core assets and the conduction of a detailed audit of non-strategic assets of SOEs aimed at strengthening SOE balance sheets.
The aim of this exercise is to strengthen the balance sheet of SOEs, while safeguarding social stability.
This intervention is the responsibility of the Minister of Finance. It includes the finalisation of the recapitalisation of national carrier, South African Airways and South African Post Office.
The intervention also looks at the reduction of the issuance of government guarantees, especially for operational reasons and the determination of the consequences of SOE non-adherence to the guarantee conditions. This intervention is the responsibility of Cabinet. The set timeline for this intervention is October 2017.
“I have raised concerns that government guarantees need to be strategically used to support infrastructure investments and capital expansion rather than finance operations and inefficiencies in the SOE,” said Minister Gigaba.
The action plan also speaks of broader SOE reforms, including the implementation of a private sector participation framework and the tabling of a draft shareholder bill, to be done by March 2018.
Energy and telecommunication
With regards to energy, the plan speaks to power utility, Eskom, approaching the National Energy Regulator of SA (Nersa) regarding its hardship this month.
The plan also speaks to the development of soft support for Eskom until a tariff adjustment in 2018. Minister Gigaba noted that the power utility’s balance sheet is under stress.
Concerning telecommunication, the plan also looks at directing the Competition Commission to investigate data prices.
Deadlines will be met
Minister Gigaba said the deadlines set in the plan will be met.
“We need to work very hard. Treasury will play its part in monitoring this and providing assistance to the Presidency in terms of monitoring, so that we report timeously to Cabinet about the implementation of these programmes.”