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18 Nov 2004 13:24
A little less market confidence in the rand might be a “welcome relief”, Finance Minister Trevor Manuel said on Thursday.
He told a Bureau for Economic Research conference in Somerset West that by making the correct decisions, South Africa had by 2001 been able to adopt an expansionary fiscal stance in a context of renewed business confidence.
However, by the end of that year, a speculative attack on the rand had made all those “happy circumstances” seem irrelevant.
“But we survived that, conducted an inquiry into the causes and consequences, and today I don’t mind saying that a little less market confidence in the rand might be welcome relief.
“But the interior calculus in the minds of currency traders and hedge fund treasuries is about as comprehensible, I have come to believe, as the Book of Job.
Which was, as you know, the original dismal science.”
Manuel also said though public sector borrowing was expected to “widen somewhat” over the next decade as major infrastructure projects came on line, the main budget deficit should remain around or below three percent of gross domestic product (GDP).
“For the next three years, we anticipate a widening of public sector borrowing from under one percent of GDP in 2002 to 4,6% in 2007, and interest on public debt will stabilise at about 4,5% of GDP,” he said.
These projects included an expected Transnet investment of more than R40-billion over the next five years, Eskom’s recommissioning of mothballed power plants, and several important investments in water resource infrastructure.
The acceleration in infrastructure investment could however not entirely be financed through debt.
This was why the profitability and balance sheets of public enterprises was so important, and why considerable effort had been put into developing a robust programme of public private partnerships.
Treasury projections indicated an increase in capital spending through public-private partnerships from about R2-billion last year to about R5,3-billion in 2007/08. - Sapa
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