/ 19 January 2009

Govt lacks plan to tackle economic crisis, says DA

Government needs to ”pull its head out of the sand” and say how it plans to protect the local economy from the effects of the global financial crisis, the Democratic Alliance (DA) said on Monday.

”Instead, what we have received is political posturing from the African National Congress’s alliance partners and silence from those in government who are tasked with the management of our economy,” DA finance spokesperson Kobus Marais said.

Last week, the ratings agency Moody’s had again said there was a need for decisive action. Signs of the economy slowing considerably included falling domestic and international demand, and threats of further job losses.

”Some analysts have predicted that we are facing a technical recession, while others have indicated that there will be no improvement in our economic prospects until the second half of the year.

”Clearly, we have not been protected from the second-round effects of the global slowdown,” Marais said.

The ANC’s recently released manifesto had done nothing to map a way out of the crisis.

”Ignoring the unprecedented risk aversion in the international capital markets, it sets out a wish list of fragmented policy goals that some economists have predicted will lead to R42-billion of additional expenditure.

”The ANC has not indicated how it will pay for its manifesto, but if it is to do so, it will need to either raise taxes or borrow more money from abroad.

”But the deteriorating economic climate will result in less money being available to be collected for tax, and risk aversion abroad makes it more expensive for us to borrow foreign money.”

Marais called on government to minimise the perception of risk in the local economy by ”stridently confirming that our orthodox macro-economic policies will not be changed” after the coming national and provincial elections.

”The DA yet again calls on the government to tell its citizens what plans are being implemented in order to lower the impact of the global slowdown, and to minimise job losses.

”Our people cannot afford for our future prosperity to be compromised by the stagnation of a political movement paralysed by its own internal political wrangling,” he said.

Last Friday, Moody’s Economy.com said pressure was mounting on the South African Reserve Bank to cut interest rates by 100 basis points at its mid-February meeting. — Sapa