The government is not planning any dramatic policy changes in respect of intervention in the fuel price and exchange rate, ministers said on Wednesday.
During a briefing at Parliament by ministers forming part of Cabinet’s economic cluster, Minister of Trade and Industry Mandisi Mpahlwa said the exchange rate is an ongoing debate.
However, the point where one can say at what level it should be has not yet been reached, he said.
The exchange rate and the oil price are part of a macroeconomic package that has served the country well.
”The strengthening exchange rate is reflective of the evolution of the economy,” Mpahlwa said, describing it as ”very positive”.
”Even with the rise in oil prices, we still haven’t seen significant feed through to inflation and interest rates. Those are all the things that mark the economic environment in South Africa at this point in time,” Mpahlwa said.
He said the price of oil will receive a lot of attention in the near future but there will be no specific intervention despite calls for the government to subsidise fuel prices.
He said the high oil price is a global phenomenon and is not limited to South Africa.
”Everybody is feeling it.”
Minister of Public Enterprises Alec Erwin repeated that the moving oil price and the flexible exchange rate are part of the macroeconomic policy and that any change in policy could do more harm than good.
He said while ”manageable intervention” is being looked at, businessmen have to adapt.
And the economic actors are getting better at operating in that environment, he said.
Erwin and Mpahlwa said gross domestic product growth over the next nine years is still targeted at between 6% and 7%, despite the challenges. Investment and export growth of 10% are also still predicted.
”The central goal of accelerated and shared growth is the building of a diversified, sustainable and employment-creating manufacturing and services economy,” Mpahlwa said.
Within this, an expected 500 000 jobs will be created, he said.
He said tourism will play an integral role in South Africa’s economic aspirations and is already providing jobs to 540 000 people.
But Mpahlwa also recognised that certain industries need to be thrown life lines in order for the country’s predictions to be met.
”The textiles and clothing sector is an example of such a declining sector and proposals to support the sector are under way, including an interim arrangement to replace the duty credit-certificate scheme in the industry,” he said. — Sapa