How will economic recovery plan be funded?
All eyes on Ramaphosa on Thursday when programme is outlined
With SA already stretched thin when it comes to external borrowing, at least one economist says he will be listening carefully to how President Cyril Ramaphosa plans to finance SA's big infrastructure projects.
Economist Prof Charles Wait also wants to know where the money will come from for the much-anticipated economic recovery plan that will be outlined by Ramaphosa on Thursday.
Ramaphosa has called a joint sitting of parliament, which has been labelled a sign of the seriousness of what he plans to put on the table.
His acting spokesperson Tyrone Seale said, in his motivation for the joint sitting, the president said Covid-19 had plunged the country, continent and the world into an unprecedented crisis, which caused huge suffering and loss of life.
“Our responses to date have averted the worst-case scenario though we remain vigilant.
“However, the damage caused by the pandemic to an already-weak economy, to employment, to livelihoods, and to public finances, has been colossal.
“We need to take extraordinary measures towards a speedy and sustainable economic recovery.”
The recovery plan has been widely deliberated among government and social partners — business, labour and community — under the auspices of the National Economic Development and Labour Council (Nedlac).
The draft plan was tabled at a two-day cabinet lekgotla on October 7-8 with further inputs made to the economic advisory council.
Wait said the government and the president had previously said they had infrastructure development in mind as a way of getting the stagnant economy moving at a desirable rate.
“We can expect that and we’d like to know the details — which projects are going to be new ones and which projects are they refurbishing and where are these projects going to be,” he said.
Wait said who would be financing these projects was also key and said the government had already been stretched when it came to external borrowing due to Covid-19.
“In principle it’s fine to finance infrastructure projects from borrowing by the government but we know how committed the government is as far as borrowing is concerned.
“If they borrow further now for these projects, then they must be doing it in the hope that they are confident that taxes can be earned and that the debt can be serviced.
“I know there’s talk of public/private partnership but again one wants detail.
“We’ve got so many of these plans and when they are announced there’s always a lack of detail and this [more details of implementation] is what I suggest we need on Thursday.
“We want to know which are these projects, what are the objectives of each project and what are the prospects of success,” Wait said.
The Covid-19 lockdown has left an already weakened economy in a devastated state as most businesses not deemed to be offering essential services were not allowed to operate during the hard national lockdown.
As a result, some businesses had to close shop, resulting in a jobs bloodbath.
According to the Quarterly Labour Force Survey, released by Stats SA, 2.2-million South Africans lost their jobs during the second quarter of the year.
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