South Africa may be undergoing a difficult economic transition, but the country is not in a hopeless situation.
This is the view of finance minister Pravin Gordhan, speaking via video conference in Cape Town earlier today.
Gordhan made the comments ahead of the tabling of the Medium-Term Budget Policy Statement (MTBPS) in Parliament this afternoon.
The MTBPS follows the main budget delivered in February. It puts forward measured proposals to narrow the budget deficit and stabilise debt.
According to National Treasury, the adjustments process provides an opportunity to make permissible revisions to the main budget, in response to changes that have affected the planned government spending for that year.
The adjusted budget may allocate unused funds, mainly from the contingency reserve, and additional amounts that have been approved for particular types of spending, if that be the case, explains Treasury.
During the video conference, Gordhan admitted the growth rate of 0.5% for 2016 is much slower than the 0.9% growth projection made in February.
"There will be better prospects in the next year, with growth projection expected to reach 1.7%," said Gordhan.
According to the MTBPS document, the economic cycle has reached its lowest point.
The document also cautioned that economic weakness on the African continent is of particular concerns for SA's growth prospects.
It reads: "Necessary adjustments have been painful, but a recession has been avoided and a recovery is emerging. Rapid implementation of decisions to promote faster growth will boost confidence, investment and employment. Without decisive action, the recovery is likely to be weak and ineffectual.
"South Africa's economic performance continues to reflect low levels of business and consumer confidence. The gross domestic product forecast has been revised down to 0.5% for 2016.
"Public investment remains relatively buoyant, but private investment has fallen across all sectors, and capital formation is expected to contract in 2016 for the first time since 2010."
However, guided by the National Development Plan, Treasury is determined to drive faster economic growth.
The MTBPS notes government remains committed to working with the private sector, labour and civil society to promote inclusive growth and economic transformation.
"With decisive action, South Africa will emerge from a period of economic weakness. This will enable government to provide greater support to the economy and boost employment."
Share