Gordhan: SA recovery may lag behind other countries

South Africa will likely lag behind the economic recovery and increasing optimism in other countries, Finance Minister Pravin Gordhan said on Monday.

He said at the financial results presentation for the state-owned Land Bank that there was building talk across the world of the beginnings of a recovery.

“We are at a time when there is a lot of talk about green shoots and the possibility of the recession having bottomed out, and are seeing the very beginnings of some optimism in the world about the economy.

“Of course in South Africa, we are at a point where that optimism will come with a bit of a lag, as with the recession itself.”

The central bank last week surprised by cutting the repo rate by 50 basis points to 7% on worries that South Africa’s first recession in 17 years was going to be deeper than previously thought.

Reserve Bank Governor Tito Mboweni said while the global economy appeared to have improved, the recovery would not be uniform across all countries and South Africa lagged the international trend.

The central bank’s rate move took cuts since December to 500 basis points, totally unwinding interest rate increases between June 2006 and June 2008.

South Africa will release its second-quarter economic growth data on Tuesday. A Reuters poll last week showed GDP was seen falling by an annualised 3,2% compared with the first quarter’s 6,4% decline.

Meanwhile, those guilty of financial crimes at the Land Bank will be brought to book, Gordhan said.

“By their very nature, financial crimes are complex and take a long time to be unravelled,” he told a presentation of the state-owned Land Bank’s 2009 annual results in Midrand.

“No stone will be left unturned. I am sure our criminal justice system will see that the culprits are dealt with in the right way.”

He could not provide more information as the four forensic investigations currently under way were at a “sensitive” stage.

The bank’s profit for the year was R166,6-million, representing a significant increase on the R17,5-million recorded in the previous year.

Profit from banking operations of R240,9-million was achieved, following a loss of R19,8-billion in the previous financial year.

“The balance sheet is healthier and the Land Bank is well on the way to recovery,” Gordhan said.

“However, there are many challenges and it’ll be a tough road to walk.”—Reuters, Sapa

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