President Cyril Ramaphosa. File photo: Phando Jikelo/African News Agency(ANA)
President Cyril Ramaphosa. File photo: Phando Jikelo/African News Agency(ANA)

Ramaphosa defends plan for sovereign wealth fund

By ANA Reporter Time of article published Feb 20, 2020

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PARLIAMENT - President Cyril Ramaphosa on Thursday defended his recent proposal to establish a sovereign wealth fund for South Africa as an act of care towards future generations.

"Our decision to establish a sovereign wealth fund even at a time of great economic difficulty is an exercise of our responsibility to future generations," he said in his reply to the debate on his state of the nation address a week ago.

The proposal comes as the country is faced with the failure of state-owned enterprises, chief among them Eskom, and public borrowing threatens to bring the debt to GDP ratio to 80% by 2030.

Ramaphosa said he would not heed the call from some quarters to shut down Eskom, which alone has debt of R450 billion and routinely suffers outages equivalent to a quarter of its overall capacity.

"We will not, as some honourable members have suggested, simply switch off Eskom’s life support, for to do so would be to plunge our economy and our country into chaos.

"We have a clear roadmap to restore Eskom’s financial and operational position and to place our entire energy sector on a new trajectory of sustainability."

Earlier on Thursday, mineral resources and energy minister Gwede Mantashe rejected a suggestion that the size of South Africa's national budget deficit argues against the establishment of a sovereign wealth fund.

"If you say you cannot do something because of a crisis, the result will be a deepening crisis," he said, adding that it was a lesson he had learnt at business management school.

Ramaphosa has left it to finance minister Tito Mboweni to provide more detail about the planned fund, and a state bank, also mooted by the president in his opening address to parliament.

In reply to his critics, Ramaphosa further said his government continued to support the adoption of a constitutional amendment to expressly allow land expropriation without compensation and would push ahead with plans to roll out national health insurance.

African News Agency

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