The Cabinet urged South Africans and businesses on Thursday to exercise caution and responsibility in the management of finances, in view of current world economic events.
“Cabinet would like to reassure South Africans on our financial austerity measures, especially in light of the plunge by global markets in the recent week,” spokesperson Jimmy Manyi told a media briefing following Cabinet’s fortnightly meeting on Wednesday.
He said that before the 2008 financial crisis, the country had taken the necessary measures to ensure the soundness and stability of its financial system and fiscal accounts.
This had enabled the country to weather the crisis and as a result, South Africa was one of the first countries to register positive growth after the recession.
Economic growth accelerated to over 3% and the growth forecast for this year was 3.4%, he said.
“South Africa is monitoring the current global situation together with other G20 countries and stands ready to take action should the need arise.”
He said the Cabinet had acknowledged that recent developments posed risks to global and domestic growth, but said it was too early to predict the effect of current events on confidence and growth.
The National Treasury would publish growth forecasts in October, when it released the medium-term budget policy statement, Manyi said.
Finance Minister Pravin Gordhan was expected to expand on the issue later on Thursday morning.
DA calls for change
Meanwhile, the Democratic Alliance called on Wednesday for President Jacob Zuma to adopt a new, growth-oriented economic framework for the country.
In an open letter to Zuma, DA spokesperson Dion George said it was common knowledge the country faced enormous economic problems of continued poverty, inequality, and unemployment.
“As such the national consensus has long been that we need to increase the rate of economic growth and job creation to extend more opportunities to those people who have previously been marginalised from the formal economy,” he said.
George said that in recent weeks, economists, the public, and leaders from all parties have been growing increasingly uneasy about the state of the economy and the future economic direction.
He said this had been fuelled by a barrage of mostly negative statistical information about the economic performance over the past 12 months.
“During this time, several credible studies have indicated that our economy is largely stagnant and is failing in the two most important barometers — creating jobs and growing at a sufficiently high pace.”
Among others, the most recent Quarterly Labour Force Survey indicated that during the second quarter of 2011 only 7 000 new jobs had been created, while the number of formally unemployed South Africans increased by 174 000.
All of these indicators pointed to a struggling economy.
Taking a stand
“The only plausible option at our disposal is therefore to shift our economic paradigm and to adopt a new, growth-oriented economic framework,” he said.
He called on Zuma to take a stand on the country’s economic future and to reject proposals for the nationalisation of mines and banks.
“Stand up and explicitly reject proposals for the expropriation of land without compensation. Stand up and tell unions to wield their influence for the betterment of all South Africans, and not just for the betterment of their own members.
“Stand up and implement the wage subsidy you proposed in the State of the Nation Address this year. Stand up for our mining industry that has failed to participate in the minerals boom of the last decade.
“Stand up and dismiss corrupt government officials that steal precious state resources. Most importantly, consider input from all perspectives,” he said. – Sapa