Publications
Partners
President Cyril Ramaphosa has given ministers in the economic cluster a two-week deadline to come up with measures to ease the burden of high fuel prices and the VAT hike on already struggling consumers.
However, he was careful not to raise hopes of a quick solution, indicating that government’s options are limited. “We know this matter is urgent and I wanted it to be attended to as quickly as possible… without raising anybody’s hope, I am saying there will be an interim report that they will give me,” Ramaphosa said.
“Economic cluster ministers will look at all options including the basket of products our people buy most, to see the extent [to] which we can extend non-vatable products. We obviously cannot tamper much in the end where it impacts on the budget and tax legislation that is out there," he said.
Ramaphosa was speaking to journalists after he concluded a three-legged visit to the oil-producing countries of Nigeria, Saudi Arabia and the United Arab Emirates.
His administration is facing pressure from consumers buckling under a combination of historically high petrol prices and the one percentage point increase in the value-added tax (VAT) rate, which is expected to contribute to higher food prices.
City Press reported on Sunday that Ramaphosa might also be strong-armed into revising sections of the Budget delivered by former Finance Minister Malusi Gigaba in February. Alliance partners Cosatu and the SACP have complained about the impact the VAT hike and high petrol prices are having on consumers, especially the poor. Political parties have called for government to increase petrol reserves and consider freezing or decreasing the fuel levy.
Rising fuel prices
During this trip, Ramaphosa discussed the global oil price with his counterparts. In particular, he urged Saudi Arabia - which provides South Africa with 47% of its oil - to increase production in a bid to arrest soaring fuel prices. “They [Saudi Arabia] are a major exporter to our country and the world. They want to continue to increase production, we will see what it does at the end,” Ramaphosa said.
“People must understand we are very concerned on the impact of fuel prices on our people. We are price takers, we have to buy at price they are selling."
South Africa's record petrol price - which breached R16 a litre in inland areas for the first time July - has been caused by the combination of a weaker rand, higher global oil prices, and higher fuel taxes. A year ago benchmark Brent Crude was about $47 per barrel. On Sunday evening it was trading at $75.33/bbl.
Investment pledges
Ramaphosa rounded off his visit with Saudi Arabia and the United Arab Emirates each pledging $10bn in investment, part of the president's ambitious drive to attract $100bn (about R1.33trn) in new investment over five years to help kick-start the struggling economy, that saw record unemployment rates and deepening poverty under his predecessor Jacob Zuma.
Ramaphosa said boh countries were serious about investing in South Africa, with Saudi Arabia looking to build an oil refinery. “It will have the bells and whistles of new technology [and] will also have the downstream effect of the petrochemical products that a refinery can produce. That already demonstrates a level of seriousness,” he said.
Under Zuma there were complaints that economic agreements reached were not implemented, while state-owned entities could not deliver on promises due to lack of capacity.
“We are not playing around. We are serious. This is about the growth of our economy and we are extremely serious about being businesslike, being focused and ensuring that we drive economic growth," he said.
Ramaphosa is expected to host a major investment summit in October.
* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER
