Govt task team to tackle rough year ahead
A government task team will be established to handle the effects of the global economic crisis, Finance Minister Trevor Manuel announced on Thursday amid remarks by an international ratings agency that South Africans can expect tough economic times in the new year.
Konrad Reuss, Standard&Poor’s MD in South and sub-Saharan Africa, added that “not even an interest rate cut would bring immediate relief for tough economic times in the new year”.
The measure was decided on by business, labour and the government to address the impact of the crisis on South Africa, Manuel said in Pretoria following a presidential working group meeting.
“The meeting asked for a social dialogue,” said Manuel. Those present agreed to do their “utmost” to lessen the impact of the crisis.
“Not only will South Africa have elections, but growth will slow down sharply,” Reuss said, adding that Standard &Poor’s was chiefly concerned over how policy makers reacted to slower growth.
“That’s where the election is important—and the question will be asked: how will the next government respond to a situation where we have slower growth.”
Manuel said that it was important for the country to demonstrate insight and find ways of dealing with the crisis.
“We can’t talk past each other ... or we’ll destroy this country together,” he said.
He said that the meeting discussed that “government, business and labour mitigate the effects of the trends we have seen in the global economy”.
At the meeting it was said it was not only important to find solutions to the real economy, but also to deal with problems relating to it, such as job losses.
Federation of Unions of South Africa secretary general Dennis George said it was important to save jobs and that people needed to be trained.
“The message is that we must use tools of social dialogue. We must do everything in our power to save jobs.”
He said that his union had submitted a proposal to President Kgalema Motlanthe.
The union said that an economic rescue plan was needed. Among the suggestions in the proposal was that interest rates be reduced.
The team, working under the auspices of the National Economic Development and Labour Council, would report back to Motlanthe in early February.
Commenting on the request for a loan from the World Bank for Eskom, businessman Saki Macozoma said that it was important that the tariff structure be looked at while ensuring that it responded to Eskom’s build programme because poor people would be the most affected by the tariff increase.
Reuss said that Standard&Poor’s would decide on a rating for the parastatal “only when we see guarantees on its debt—and National Treasury would have to extend unconditional timely guarantees for us to retain Eskom’s present rating “.
Currently, Eskom has been put on negative credit watch by Standard&Poor’s.
On Thursday Transvaal Agriculture Union SA president Ben Marais said it was clear that farmers would have difficulty in obtaining production loans or an overdraft as a result of the current situation.
Motlanthe echoed these sentiments earlier this week when he spoke at a meeting of the National Economic Development and Labour Council: “A combination of global and domestic economic circumstances provided a real test for South Africa’s economic policy, which was likely to continue in 2009.
“I have no doubt that the government will bring a new set of issues and challenges to the process of social dialogue after April next year,” he said.—Sapa