Five percent Gross Domestic Product (GDP) growth in South Africa is ”doable” in 2005, Finance Minister Trevor Manuel said in a post Budget briefing on Thursday morning.
In his Budget presentation on Wednesday, Manuel forecast 4,3% growth in GDP, which he said was in line with the consensus of economists, compared with last year’s 3,7%.
”I think 5% GDP is doable if we look at what happened last year. In February we forecast 2,9% growth and the consensus at that time was 2,2%.
The actual outcome was 3,7%. So with the measures that we put in place yesterday [Wednesday], I believe 5% growth is doable.”
”The main focus of the Budget is that we are going to invest in the future. The more we invest in people, the more likely it is that we can get 5% sustainable growth, as a key constraint on this economy is the availability of skills.”
In response to a question as to why South Africa does not extend the social grant, which already reaches 11-million people out of 46-million, Manuel said there are proponents of the basic income grant who say that every man, woman and child in South Africa should get R100 or R150 per month. If that was implemented, it would cost in the region of R90-billion per annum, which would bankrupt the country.
Manuel corrected a question quoting a 40% unemployment rate in South Africa, saying if that was correct, ”we would have a revolution in South Africa”.
In the State of the Nation address in February, President Thabo Mbeki said there would be more resources allocated to South Africa’s statistical authorities.
Budget to boost morale in police force
Safety and Security Minister Charles Nqakula expressed satisfaction with Budget, syaing: ”The Budget allocation for safety and security will greatly assist the process of enhancing skills levels of police members through various training programmes.”
”It will serve to buttress the ongoing efforts of intensifying the upgrading of skills levels within the South African Police Service and strengthen re-skilling initiatives where required.”
Nqakula said the budgetary increase for better police pay would help the service attract members of a high calibre. This would also help to boost morale.
The consequence of all of this will be an even better resourced police entity,” Nqakula said in a statement.
Nafcoc applauds Budget
The National African Federated Chamber of Commerce (Nafcoc) has welcomed this year’s budget, saying tax relief to small enterprises would open space for growth.
”In our view, there’s been a remarkable tax relief on SMMEs compared to last year’s budget,” Nafcoc’s chief financial officer Mandisa Booi said.
”The tax relief of R1,4-billion targeted to small business companies intended to make resources available for growth and investment came at the right time when the rand is at its strongest level.”
The current environment is still not friendly to start-ups and small businesses, Manuel’s move ”will level ground for them when entering the market”.
”The relief of burden on administrative and compliance costs particularly on VAT and SDL is applaudable.
”The project of broader business management [provision of tax helpers, help desks, extended hours and free accounting packages] is greatly appreciated,” Booi said. – Sapa, I-Net Bridge