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SOUTH AFRICA TAKES LOAN TO BOOST ECONOMY

The South Africa n President, Cyril Ramaphosa will embark on a major public works and job-creation. This is a drive in response to the coronavirus crisis.

Ramaphosa said on Thursday, unveiling a plan to return Africa’s most industrialised economy to growth.

Under pressure after data showed the largest-ever gross domestic product (GDP) contraction in the second quarter, Ramaphosa said his plan could unlock more than one trillion rand ($60bn).

This unlocking of treasure will be in investment over the next four years and creation of more than 800,000 jobs.

The president said modelling by the National Treasury showed it could raise annual economic growth to an average of around 3 percent over the next decade.

“Despite these vital interventions, however, the damage caused by the pandemic to an already weak economy, to employment, to livelihoods, to public finances and to state-owned companies has been colossal,” Ramaphosa told a joint sitting of parliament.

South Africa has been in recession before it recorded its first coronavirus infection in March 2020.

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However, with one of the world’s strictest lockdowns and a global drop in demand for its exports causing GDP to fall by more than 17 percent in annual terms in the April-June quarter, when more than two million jobs were lost.

The Cyril Ramaphosa’s government has been in talks with business and labour leaders for months trying to plot a path to recovery.

Nevertheless, Ramaphosa said on Thursday that an infrastructure build programme would focus on schools, housing, water and sanitation , as well as ports, roads and railways.

Moreover, other parts of the plan include expanding power generation capacity to ensure reliable supplies, local production targets in sectors like agro-processing, healthcare and industrial equipment. And pushing through reforms to ease regulatory bottlenecks, including for miners.

Meanwhile, a coronavirus relief grant has been extended for further three months. And 100 billion rand has been set aside over the next three years for job creation initiatives, the president stated.

The president’s speech comes two weeks before South African Finance Minister Tito Mboweni will lay out spending plans at a mid-term budget.

While waiting for Mboweni’s speech, Ramaphosa said the country could not sustain current levels of public debt. As rising borrowing costs are diverting resources needed for economic and social development.

South Africa has planned to survive the effect of coronavirus on her economy.

SOURCE: Aljazeera.com

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