South Africa will continue to manage its economy with restraint after next year’s elections, despite pressure from leftist allies seeking to adopt more expansionary policies, African National Congress (ANC) leader Jacob Zuma says.
Zuma, who is likely to become president after the elections, told the American Chamber of Business late on Wednesday that the government would maintain the policies that had spurred a decade of strong growth and prepared the country well for the choppy economic waters ahead.
”We are proud of the fiscal discipline, sound macro-economic management and general manner in which the economy has been managed. That calls for continuity,” he said in a copy of his speech.
”Because of the policies we have adopted in the past, and the difficult decisions we have had to make, we are likely to weather this particular global economic storm to a certain extent.”
South Africa’s rand and stock market have been hard hit by risk aversion linked to the financial crisis and economic growth has slowed on a combination of declining global output and high interest rates.
The Treasury believes South Africa is likely to avoid a recession and its expansion is seen outpacing growth in developed countries. According to a consensus of analysts’ expectations, South Africa’s growth is expected to slow to between 2% and 3% in 2009.
Zuma credited the economic policies of the past decade with spurring growth and said the leftist allies of the ANC — the Congress of South African Trade Unions (Cosatu) and the South African Communist Party (SACP) — did not decide its policies.
”ANC policies are formulated by the ANC. Our alliance partners participate in the process,” he said.
”However, they cannot and do not dictate to the ANC what its policies should be.”
Cosatu and the SACP are pushing for an overhaul of policies, including the focus on inflation targeting, and want a more expansionary fiscal stance.
They helped elect Zuma to his ANC position, frustrated by former president Thabo Mbeki’s pro-business leanings.
Despite Zuma’s assurances, many investors remain cautious given that the ANC’s top decision-making body is dominated by those sympathetic to leftist policies. — Reuters