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Behind Ramaphosa’s mega-stimulus package

It will take some R50 billion worth of sacrifices by the government to make it possible.

President Cyril Ramaphosa has unveiled a government-led infrastructure spending plan that is intended to attract investments from the private sector and stimulate the struggling economy at a time when there is no fiscal room to do so.
 
Ramaphosa’s proposal has been in the making since July, when the ANC resolved at a cabinet lekgotla to introduce a fiscal stimulus package to support an economy that has now slipped into a recession and expected to grow by less than 1% in 2018.
 
Ramaphosa, whose presidency since February has been centred on growing the economy and rooting out corruption, says the infrastructure plan will focus on the roll out of projects worth R400 billion.
 
These projects, which have already been identified in the government’s fiscal framework, will be rolled out over the medium to long term. Some of these infrastructure projects are already led by the government through state-owned enterprises, which have on-going roads, dams and public transport network projects.
 
In funding the projects, Ramaphosa will be looking at development financiers such as the Development Bank, Industrial Development Corporation (IDC), African Development Bank and pension funds such as the Government Employees Pension Fund, whose R2 trillion worth of investments is managed by the Public Investment Corporation. 
 
His infrastructure plan has already received the stamp of approval from the IDC, which plans to extend R20 billion worth of funding in the next 20 months.
 
In recent years, National Treasury has cut infrastructure spend to redirect money to fee-free higher education and to offset low revenue collection. Treasury figures show that the budget for municipal infrastructure, housing, and school building was cut by R46.6 billion in the 2016/17 fiscal year, and R48.3 billion in 2018/2019.
 
The cuts have led to poor implementation of infrastructure projects. However, Ramaphosa says an infrastructure executive team in the presidency has been set up, which will feature skilled individuals from the private sector, to monitor the implementation of projects.
 
“The true test will be how much of the infrastructure plan Ramaphosa will be able to implement, how quickly it can be implemented and whether we can get economic growth from it,” says Citibank economist Gina Schoeman.
 
“We need to stimulate the economy by increasing business confidence, certainty and by getting the private sector to invest.”
 
The rest of the plan
 
Other initiatives that form part of the stimulus package include reprioritising government’s budget to support emerging farmers in the agricultural sector; revising the mining charter; the release of radio spectrum; easing of visa regulations to boost the tourism sector, and expanding government’s procurement from small businesses.

Read: Government to direct Icasa to license broadband spectrum

Ramaphosa said to ease Visa rules to boost tourism
 
In other words, these initiatives will be funded from the existing budget envelope with R50 billion already being identified by the government. More details on how the government will reprioritise its spend will be unveiled at the Medium-Term Budget Policy Statement on October 24.
 
Ramaphosa’s focus on reprioritising spend will be budget neutral, meaning it won’t require increasing SA’s already high debt levels to fund the stimulus package. “This is a positive move. The stimulus package would have been a lot worse if we threw money at other problems when the real problem is inefficiency in the state,” says Schoeman.
 
SA doesn’t have any additional money to fund new and productive initiatives to stimulate and revive economic growth. Its biggest challenge is the high debt levels, which is at more than 50% of GDP.
 
Another problem is that Treasury is facing a R48.2 billion revenue gap in the 2017/18 fiscal year and possibilities that South African Revenue Services might miss its R1.34 trillion tax collection targets for the 2018/19 fiscal year looks precarious.
 
Without meaningful economic growth, a serious effort to stabilise government debt and spending, any attempt to introduce stimulus measures to the economy will likely be undermined.
 
But as with dealing with rampant corruption in SA, Ramaphosa is asking for time before the economy starts kicking into gear through his stimulus package.

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If he can cut corruption by 50% that will be a good start.

Then award infrastructure work only to those who are capable of doing a proper job and have the expertise and capability. No ‘middlemen’ or political favourites.

The tax take should concentrate on ‘cash’ businesses who evade tax and recipients of deal ‘sweeteners’ etc. SARS should not bleed the ‘soft’ targets to death.

they are only after the Government Employees Pension Fund.

Better government pension fund than taxpayer money.

Maybe this will be incentive for ANC to make it work?

Trying to find any way to get their hands on the Government Employees Pension Fund…..brilliant plan to thief further….just brilliant.

That is the problem in SA. Everyone steals the pension fund money. With no consequences. Or very few. If they do ever get paid back they are no more than a cheap loan scheme. Steinhoff, Fidentia, Pinnacle Point, Canyon Springs and so the list goes on…..only Arthur Brown ( who never acted on his own) paid the price. The others are all protected. Both financially and politically.

ZAR reaction says it all.

Nobody believes Rammer Pozza anymore. Did we ever?

“support emerging farmers in the agricultural sector” – Good one…Start by allocating the 5 000 odd farms the State already own?? Allocate the millions of unused hectares the Government owns?? Give the current people on tribal lands their properties??

“revising the mining charter’ – Done, but not going to save the Gold mining sector?? Possibly also the Platinum sector??

‘the the release of radio spectrum” – Great, Get it Done!!

‘easing of visa regulations to boost the tourism sector” – Get it Done, but also make our Country is a Safe destination!!,

‘and expanding government’s procurement from small businesses – Yes!!! All small Businesses!!

” Infrastructue Executive Team ” – at who are they ? Jacob, Lynne Brown and Ace ? They will steal what is left – and that is – very little.

The Government Employees Pension Fund is not little……believe me. That is the LAST “Bastion” that keeps SA alive. Very few people can comprehend how eager the ANC are after that money…..makes the Guptas look little.

There is only one way to measure stimulus packages – by the outcomes they produce and that will be job creating, growth and GDP increase.

How will the #StimulusPackage benefit the people?

Can someone show me the numbers to understand?

What is the cost of all this funding, what are terms & conditions at what interest rate and over what period to paid back. What is real cost to SA R 800 Billion?

MEGA stimulus package? Mega se moer man, hierdie f@kken belastingsbetalersgeld wat gemors word om stemme vir die ANC te werf!!!

Cyril really is turning out to be a damp squib.

If about 95% of ANC members dropped dead tomorrow, we might have a chance. I still wouldn’t put money on the other 5% to steer us in the right direction, though.

Sadly, Mmusi is also a clown. And the less said about the EFF, the better.

We desperately need some LEADERS in SA.

The war is between good and evil. The evil have stelen the better life for all. The good have a major challenge. Ramaphosa and many honest people will put South frica on the right path and need our help. I trust the good in the current ANC without any doubt. The good in the other parties must make the ecomnomy work for a better life for all. MAD = Make A Difference !

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