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Mboweni warns that without big reforms it's 'game over' for SA

Jan 10 2020 08:24

In a series of tweets in the early morning hours of Friday, finance minister Tito Mboweni warned of dire consequences if South Africa did not push ahead with economic reforms.

"If you cannot effect deep structural economic reforms, then game over! Stay as you are and you are down graded to Junck (sic) Status!! The consequences are dire. Your choice," Mboweni warned, without specifying who he addressed.

"What are critical Economic Strategic Reforms? Read the National Treasury now Government Document! Let us move Forward! Many Steps at the same Time!!"

In August last year, Treasury released a discussion document - called "Economic transformation, inclusive growth, and competitiveness: towards an economic strategy for South Africa" - that recommended big economic reforms which it believed could create 1 million jobs.

Its proposals included introducing more private competitors to Transnet, that metros should take control of rail, small businesses should be exempted from industry wage agreements, reducing red tape for businesses by 25% over five years and that households and businesses should be able to sell electricity that they produce.

While largely welcomed by business, the policy document and Mboweni faced resistance from within the ANC, as well as from its labour allies, with Cosatu among its most vocal critics. The unions objected to proposed labour market deregulation in particular.

The draft paper was adopted in part by the ANC's national executive committee in October, and published as part of the medium-term budget policy statement in October. 

The SA economy is in serious trouble, with the World Bank this week becoming the first key institution to cut its economic growth forecast for South Africa to below 1% for 2020 due to electricity supply concerns.

The credit rating agency Moody's - which is expected to downgrade South African government bonds to "junk" this year - in November warned that there is a “material risk that the government will not succeed in arresting the deterioration of its finances through a revival in economic growth and fiscal consolidation measures”.

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