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Ramaphosa to brief lawmakers as SA seeks to cut spending

President to give details on plans to boost economy.
Ramaphosa will speak at 2 pm in parliament during his quarterly question time with lawmakers. Picture: GCIS

President Cyril Ramaphosa is to brief parliament on efforts to boost economic growth and tackle the nation’s crisis-level unemployment rate just weeks after the National Treasury asked government departments to cut their budgets.

The Treasury has proposed trimming spending by 5% in 2020, and 6% and 7% for the following two years, in its medium-term expenditure framework guidelines, according to Business Day newspaper. They were distributed to departments to guide their preparation for their budget proposals.

It comes after an expanded bailout for struggling power utility Eskom, appeals for support from other state companies, weak economic growth and declining tax revenue prompted calls for urgent action. The economy contracted the most in a decade in the first quarter and the jobless rate climbed to 29%.

While this is the first sign that the government is heeding calls for action, analysts remain cautious.

Should the cuts materialise it would “send a strong signal about government’s commitment to fiscal consolidation” and would be viewed positively by markets and credit ratings agencies, said Elna Moolman, an economist at Standard Bank Group.

Retaining the country’s last investment-grade credit rating by Moody‘s Investors Service depends on how government approaches the fiscal deficit and financial troubles of state-owned companies.

The rand was 0.5% weaker at 15.25 against the dollar at 8:45 am in Johannesburg and government bond yields were little moved.

“If the budget cuts become a reality, further downgrades will likely be postponed,” said Per Hammarlund, chief emerging-markets strategist at SEB AB in Stockholm. “However, there is a lot more work to be done especially with the state-owned enterprises, which implies that investors will continue to fret over potential downgrades.”

The proposal marks the start of the budget negotiation process, Johannesburg-based Business Day reported.

Ramaphosa will speak at 2 pm in Parliament during his quarterly question time with lawmakers.

© 2019 Bloomberg L.P.

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If you think we have intense riots now, wait and see after the cuts take affect.

Sounds good. First time they mention cutting spending.

Unfortunately our man has in the last 18 months got himself the reputation of a great talker and a no doer. Because he is a likable person they use him to pull the wool over every bodies eyes but I suspect that most investors local and foreign are aware of this by now. He is not in charge everybody knows that.

If they don’t cut the government and Soe’s workforce it means they are probably just window dressing and shifting much needed projects from one year to the next in an effort to not be downgraded any further.

They don’t have the ability to run the country. Never had in the past and never will have in the future.

They probably will cut spending but in the wrong areas. Salaries and wages for the bloated civil service and SOE’s will never be tampered with as this would lose them votes, not to mention the militant unions that they would have to deal with. The crazy thing is that they could turn the situation around for free by freeing up the economy, reducing the ever increasing smothering red tape and going back to doing a few things properly such as law enforcement. As these things are easy and free to do, we must therefore assume that this is not what the ANC actually wants. Maybe the pursuit of the NDR for the benefit of the few cadres, commissars and comrades is actually the blueprint they are working on. Maybe we are the fools for thinking otherwise ?? If only we knew the truth !

What I detest when you listen to our man talking it is as though all the problems has ALREADY been sorted out.

All he has to say is how much money (That we don’t have) they have thrown at the problems. To help our poor people. BS!

His FDI is a sham as well. HOW MANY JOBS HAS IT CREATED??

Nothing man. Be careful to believe everything you hear. Dangerous.

End of comments.

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