NEWS
13/07/2017 12:23 SAST | Updated 13/07/2017 13:50 SAST

Government's Economic Growth Action Plan -- Gigaba's Speech In Full

The finance minister included deadlines in his plan.

Siphiwe Sibeko / Reuters
South Africa's Finance Minister Malusi Gigaba poses for a photograph after speaking at the Thomson Reuters economist of the year awards at the Johannesburg Stock Exchange (JSE) offices in Sandton, South Africa, July 13, 2017.

Following the release of Q1 2017 GDP data confirming an economic recession, the Minister of Finance has engaged with various stakeholders to map a way forward. It is acknowledged that failure to set the economy on a higher and more sustainable growth path will disadvantage a large portion of our population and undermine efforts to rapidly address unemployment, inequality and poverty.

In our engagements with various stakeholders several major concerns were raised, amongst others:

  • Continued slow growth, the recession and the potential impact on the fiscal framework;
  • Rising government debt;
  • The state of State Owned Companies (SOC) and risks to contingent liabilities; and
  • Policy uncertainty and low business and consumer confidence.

Government has been deeply engaged with the issue of low economic growth and the recession, analysing its impact on social welfare, and considering an appropriate response. There have since been several engagements in Cabinet and amongst the Economic Cluster Ministers to craft an appropriate government response.

The President hosted a meeting of several ministers on the 28th of June 2017. At the meeting, the President stressed the urgency of a coordinated response, and to this end an agreement was reached on implementation timelines for key structural reforms related to the nine point plan.

These would support both business and consumer confidence thereby laying the foundation for an economic recovery. Details of the key areas are listed in the table attached.

These interventions are the beginning of a response programme that will be unpacked in the MTBPS and the 2018 Budget.

The President will monitor and coordinate implementation to ensure these timelines are met.

The Minister of Finance has also committed to exploring an economic support package within existing fiscal resources. The support package will be designed to enhance the nine-point plan structural reform programme, and will depend on the government's ability to find resources through reprioritisation from areas of slack towards areas with higher potential for growth and employment. Any support package will be dependent on progress in implementing these interventions.

At the medium-term budget policy statement (MTBPS) we will be able to more comprehensively speak to our economic outlook and growth prospects. It is critical that we go into the MTBPS having demonstrated progress in unlocking growth.

We've made progress on resolving electricity constraints, and improving labour relations and the ease of doing business. The global economy presents opportunities, including growth in some of our major trading partners, a recovery in commodity prices, and strong capital inflows into emerging markets.

Let's take advantage of these opportunities.

We also call upon all social partners to engage proactively on practical initiatives to bring about inclusive growth and economic transformation. We need all our collective leadership, initiative, imagination, and ingenuity. Achieving the NDP's Vision 2030 requires all of us to find common cause, for the sake of all South Africans.

Intervention

Responsible authority

Timelines

Fiscal Policy

- Finalise a sustainable wage agreement

Minister of DPSA

February 2018

- Finalise infrastructure budget facility

Minister of Finance

October 2017

Financial sector and tax policy

- Convene Financial Sector Summit to quantify transformation targets, including for low-income housing and transformational agriculture

Minister of Finance

December 2017

- Bring down banking costs by implementing Twin Peaks

Minister of Finance