South Africa’s President Cyril Ramaphosa believes an economic stimulus package, adopted by Cabinet, will spark economic activity in the country which slipped into a technical recession this month. Although the package is yet to be made public, Ramaphosa shared an outline of it with South Africa’s business and labour leaders during a consultative meeting in Pretoria on Friday.
According to the presidency, the package will include a set of economic reforms covering mining, telecommunications, tourism and transport industries to ensure economic recovery, investment and job creation.
“President Ramaphosa indicated that the stimulus package will reprioritise government spending, within the existing fiscal framework, towards activities that will stimulate economic activity,” said Presidency spokesperson Khusela Diko.
“The meeting also discussed proposals to establish an infrastructure development initiative that draws on private sector funding and delivery expertise,” Diko added.
Finance Minister Nhlanhla Nene had in August said that the South African government would need R48 billion to actualize Ramaphosa’s economic stimulus package. However, Iraj Abedian, one of South Africa’s most trusted and well respected economists, noted at the time that the country needs a short to medium term plan, not a stimulus package.
“We are not in a cyclical downturn that a stimulus, or cutting interest rates, or cutting tax rates can fix. We are in a state that is the consequence of a structural hollowing out of the economy. And, therefore, a turnaround strategy required is not a stimulus package, but a turnaround three-year or five-year plan.”