BARRY STREEK, Cape Town | Friday 11.00am
PRESIDENT Thabo Mbeki expressed bullish views about the state of the South African economy when he addressed Parliament this morning and announced the formation of an International Investment Council that includes George Soros and Tony O’Reilly, the head of Independent Newspapers.
He also hinted that further steps to reduce foreign exchange controls over South Africans would be reduced, if not removed, when Finance Minister Trevor Manuel presents his budget on February 23.
“Many major indicators point to the excellent work that has been done to place our country on a strong growth path,” he told the 490 South African MPs.
“All indicators also signal that during this year, our economy will register much more vigorous growth than it did last year. Of great importance in this regard, indicating the resilience, the effective restructuring and therefore the improved international competitiveness of our economy was the success we achieved in withstanding the effects of the East Asian economic crisis of the late 1990s.”
Mbeki said while the Reuters December 1999 Survey resulted in the highest projected GDP growth rates of 3.5% and 3.7% for the years 2000 and 2001 reespectively, the January Survey sharply raised these figures to 6.5% for both years.
These figures should be compared to average GDP growth achieved in the period of 1993-1998 of 2.7%.
In 1993 foreign direct investment amounted to R9,412-billion compared to just under R6.5-billion in 1998, with portfolio investment growing from R2.4-billion to R20.4-billion over the same period.
“Whereas the level of inflation was 12.5% during the period 1990-1994, it had come down to 5.2% for 1999 and is projected to come down further during this year to 5%.”
At the height of the Asian crisis, the interest rate rose to 25.5% but was now down to 14.5%. Foreign reserves stood at R32.6 billion in January 1999, but two days ago they had reached R46.4-billion.
In the last few days, a major international agency ranked South Africa with regard to potential level of non-performing loans in the same bracket with countries such as Austria, Finland, Hong Kong, Ireland, New Zealand, Norway, Singapore and Spain.
The new International Investment Council had now been constituted, except for three to four confirmations.
The members of the council included William Rhodes, vice-president of the Citigroup Inc of the US; George Soros, chairperson of Soros Fund Management; Frank Savage, chairperson of Alliance Capital Management International; Percy Barnevik, chairperson of Investor AB of Sweden; Niall Fitzgerald, co-chairperson of the British-Dutch Lever; Minou Makihara, chairperson of Mitsubishi Corporation of Japan; Sam Jonah, CEO of Ashanti Goldfields of Ghana; Ratan Tata, Group Chairperson of Tata of India; Hassan Marikan, president of Patronas of Malaysia; Sir Robert Ross, chairperson of the D-Group of Britain; Martin Kohlhausen, chairperson of Commerzbank of Germany; Jurgen Schrempp, CEO of Daimler-Chrysler; and O’Reilly.