South Africa is well positioned to weather the current global economic turmoil, Finance Minister Trevor Manuel said on Wednesday.
While a difficult set of challenges lay ahead, he was confident that ”our ship is strong [and] that we will weather the present storms that are raging worldwide”, he told the National Assembly.
”We have steadily built up our defences. Yes, we are going through a difficult period, but this economy has the resilience to continue growing and we are well placed to benefit from a global recovery in the near future.
”When one looks beyond this storm, one can see the tremendous potential of our economy.
”Similarly, when one looks at our public finances and at our public sector, we can see that the bigger picture shows steady progress in developing our capabilities and in improving the lives of the poor. We will ride out this storm,” Manuel said.
Replying to points raised during debate on the budget, he defended the government’s fiscal stance and emphasised that the policy of inflation targeting between 3% and 6% would not be abandoned.
The adoption of inflation targeting in the late 1990s had enabled the economy to grow and to become more competitive.
”We recognise that interest rates are a blunt instrument to achieve the objective of lower inflation.
”However, it is also evident that even the non-food and oil components of inflation are increasing and so, during this time of heightened turbulence, it is important that we continue to use inflation targeting as our anchor upon which we steady our economy and invest for higher growth.
”We cannot, at the first signs of stress, abandon our anchor,” Manuel said.
There had also been vigorous debate on the fiscal stance adopted by the government.
”Given the high current-account deficit, rising inflation and the volatile international environment, the measures we have taken to raise national savings are correct and will provide a degree of protection in these troubled times,” he said.
The economic reforms put in place since 1996 sought not to pander to international capital or to the whims of any one interest group.
”They are firmly aimed at providing our economy with the resources and the protection required to grow and to grow more equitably.
”Furthermore, fiscal policy has provided the public sector with the resources to impact on the lives of all South Africans.
”We might debate the magnitudes and levels of savings we seek to garner through our fiscal stance, but we all recognise the fact that fiscal policy has created a stable platform upon which we can achieve our social, political and economic objectives,” he said.
Manuel also welcomed renewed efforts to hold the executive and government departments to account.
Budget allocations in themselves did not change peoples’ lives, and it was the translation of financial resources to quality schooling, bricks and mortar, better roads and public transport networks, improved healthcare and more effective policing that people wanted.
”Judging from many of the remarks by members, we recognise a growing frustration with the pace of service delivery, notwithstanding the allocation of significant amounts of money.
”We accept that in many parts of the public service, we do not get good value for the billions we spend,” he said.
The Assembly had a critical role to play in raising the bar on the performance of the public sector, and the steps taken by the Parliament to hold the executive, departments and senior managers to account for the money allocated to them was welcomed. — Sapa