JOHANNESBURG – Finance Minister Tito Mboweni said on Thursday that the country’s new economic recovery strategic plan would be completed by the time he delivered his medium-term budget policy statement (MTBPS) at the end of the month.
Mboweni gave a glimpse of what the final plan might look like during a third colloquium on the economy in Pretoria, but said consultations were still taking place on the finalisation of the strategy.
He said the National Treasury was fine-tuning the critical aspects of the plan.
“It’s now almost injury time,” Mboweni said. “The expectation is that, when we submit the MTBPS, we should also provide the finalised version of the economic strategy.
“But, as you know, these things are not static; they keep moving, so I’m not quite sure if I should say the economic strategy of South Africa, or we are still (moving) towards strategy. We should allow the policy document to keep moving and evolving. It’s not some kind of dogmatic statement.”
Mboweni released the recovery plan in August.
The plan, titled “Towards a growth agenda for the South African economy”, calls for structural reforms, such as the selling of Eskom’s coal-fired power stations and establishing an independent transmission company to address South Africa’s key economic challenges and boost growth.
So far, the draft has garnered more than 700 comments. Mboweni said some of the responses were not aligned with the plan’s desired outcomes for economic growth, and thus had been carefully selected.
He said the document was partly influenced by the work of economists who produced India’s economic strategy.
“My guidance was ideas that are internally consistent with what we are trying to do; we should incorporate. But those which are internally inconsistent, we should just appreciate their contribution, but say this is not consistent with what we are trying to do,” he said.
“For instance, somebody who says in order to get the economy going the economic strategy must say we are abandoning inflation targeting. That is internally inconsistent with what we are trying to do. Or somebody who says the National Treasury must instruct the South African Reserve Bank to cut interest rates by 200 basis points - that’s inconsistent with our mandate. We can’t do that.”
Mboweni said he would also be meeting his Cabinet colleagues around October 24 or 25 for a “conversation” about the budget.
He said lack of implementation was one of the biggest constraints to economic growth in South Africa, adding that the government would make progress if it were to at least implement about 30 percent of the things it committed to doing.
Alliance and social partners such as Cosatu have expressed strong opposition to Mboweni’s plan, in particular raising concerns about expected job losses if it were to be implemented, and saying it must first be discussed at the National Economic Development and Labour Council.
“But it also speaks to the failure to rally around the major economic actors in South Africa to pull in the same direction,” Mboweni said.
“For example, when you mention that we should review the extension of collective bargaining agreements to non-parties, you won’t get everybody to move in the same direction. Immediately you will probably get insults from everybody else. If you dare ask a question whether the level of the national minimum wage is appropriate for a society with such high levels of unemployment, you are going to be burned at the stake.”