Presidency said to play central role in economic stimulus package rollout | Fin24
 
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Presidency said to play central role in economic stimulus package rollout

Sep 20 2018 17:45
Ferial Haffajee, Fin24

For months, officials at National Treasury have been working with colleagues in the Presidency and across government to put the finishing touches on a stimulus package that President Cyril Ramaphosa will announce on Friday.
 
It is loosely modelled on the stimulus package former US president Barack Obama announced soon after he took office in 2008, but of course, South Africa has far less funding to play with.
 
While the economy is in recession some economists believe is probably on its way out of the slump - which favours a successful package, provided the state can effectively implement it.
   
Senior government sources say the stimulus package will be run from the Presidency, where Ramaphosa has finalised his top team. His vision is to return the Presidency to a fulcrum position in government as it was during the era of former president Thabo Mbeki.

Business Day has reported that the plan will be infrastructure-driven. There are currently 64 big projects awaiting approval at Treasury, including projects for dams, transport systems and big-ticket items, like hospitals.

Finance Minister Nhlanhla Nene last week told a Moody’s Investors Services conference that government would seek private sector participation on these.

'Doing something meaningful'

A Treasury official says there will be other parts to the stimulus package. "We want to give confidence that government is doing something meaningful," he said on condition of anonymity, since government has planned that the programme is something Ramaphosa must own to give identity to his presidency.
   
A significant part of Ramaphosa’s message is likely to be that government cannot be responsible for growth and employment on its own, as public spending makes up only one-third of gross domestic product.

"It will be a call to action," said the Treasury official.

The stimulus package team worked on the principle that spending must be reprioritised toward areas of greatest economic activity, and away from consumption. Currently, those areas are agriculture, tourism and mining.

The package has already been costed into the medium-term budget policy statement, which Nene will reveal on October 24. Ramaphosa will also be hosting a mega investment summit from 25 to 27 October, where the government is likely to showcase investment opportunities.
    
A statement from the Presidency on Thursday said the president would "announce the measures that have been agreed by Cabinet to reignite growth, stimulate economic recovery and secure confidence in sectors affected by regulatory uncertainty and inconsistency".
 
He is likely to give more information on the Mining Charter - which Cabinet approved on Wednesday, and when amendments to laws on land expropriation without compensation are likely to be tabled. Presidency officials say Ramaphosa wants certainty by the end of 2018.

 
By Fin24’s calculations, which have not been verified by the Presidency, Ramaphosa has secured around $34.76bn of his goal of $100bn in new investments he wants to attract to SA over five years. 

These include pledges by Saudi Arabia and the UAE to each invest $10bn, as well as the promise by China to invest $14.7bn, of which $2.5bn in a government-backed loan for Eskom with the China Development Bank. In May 2018, meanwhile, the United Kingdom pledged $65m to help SA improve its business environment.

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