Pres. Cyril Ramaphosa conceded that South Africa faces serious economic challenges, although he is positive that the necessary reforms and the removal of restrictions on economic growth will be able to remedy the situation.
After his congratulations to the Springboks and other sports teams, Ramaphosa said that while reflecting on great achievements on the sports field, there must also be reflection on the country’s economic recovery and the further steps that must be taken to revive economic growth and people improve their lives.
“The last three years have been extremely challenging. We are emerging from more than a decade of stagnant economic growth, exacerbated by the impact of the Covid-19 pandemic. And we are faced with a series of international and domestic pressure factors that have set back our economic recovery.”
According to Ramaphosa, the stimulus package that the government introduced after the Covid-19 pandemic reduced further damage to the economy.
“Since then, amid severe load shedding and increased global volatility, the economy has continued to grow, albeit too slowly. The economy has shown a significant degree of resilience and is now larger than it was before the pandemic.”
Despite the progress that has been made, poverty, inequality and unemployment remain high, Ramaphosa said.
“We continue to face domestic and international pressure, and our economy is growing too slowly for us to overcome the challenges our country faces. Due diligence has curbed economic growth. The underperformance of ports and the rail network affects our ability to get exports to market.”
Government spending has continued to exceed income since the global financial crisis of 2008, without a commensurate increase in economic growth.
“As the finance minister has noted, 18c for every rand the government collects in revenue goes towards servicing our national debt. This means that we are now paying more interest on our national debt than we budget for the police force.”
According to Ramaphosa, faster and inclusive growth is ultimately the only solution to unemployment, poverty and inequality. Growth is also necessary for the sustainability of public finances.
“We therefore remain absolutely committed to stabilizing our levels of debt and adopting a responsible fiscal policy. The finance minister will outline the government’s plans to achieve this trajectory in the medium-term budget framework on Wednesday.
“Spending on health, education, policing and other essential services will be protected as far as possible. As we move to target spending on programs that work for the poor, we must recognize that our social grants, as well as our public employment programs, are essential to supporting those who are vulnerable. These programs have not only reduced poverty, but have enabled recipients to seek employment and engage in other economic activities to support their livelihoods.”
According to Ramaphosa, the country is on track to solve the most important constraints on economic growth by stabilizing energy supplies and fixing the logistics network.
“The reforms underway will drive economic growth in South Africa in the coming years, leading to a stable supply of electricity, a working railway system and more job opportunities for all South Africans.”