/ 31 October 2019

Ramaphosa promises light at the end of a gloomy economic tunnel

Cyril Ramaphosa
President Cyril Ramaphosa. (David Harrison/M&G)



President Cyril Ramaphosa has warned South Africans of more belt-tightening as the economy continues to flounder.

The president was answering questions from members of Parliament in the National Assembly, where legislators focused primarily on the ailing economy.

He told legislators that: “I hope all South Africans realise we are in a situation where we have to cut back on a number of things in order to save for tomorrow.”

His remarks come a day after Finance Minister Tito Mboweni’s medium term budget policy statement.

Mboweni gave a sobering outlook, announcing that treasury expects only a 0.5% increase in economic growth, while the national debt — currently at R3-trillion — is expected to grow to R4.5-trillion over the next three years.

READ MORE: Tito’s medium term budget statement: Debt, debt, debt

The president’s question time also comes in the same week where Statistics South Africa announced the country’s highest-ever unemployment rate, of 29.1%

Opposition MPs quizzed Ramaphosa over government bailouts for failing state-owned enterprises, while South African households have to cut costs.

“Our tax collections have gone down by 53-billion, that is a hole that needs to be plugged… Eskom needs to be funded. If the government lets Eskom goes to the wall, this economy will collapse. Everyone agrees we need to support this SOE [state-owned enterprises]. Our economic and social life hinges on the fortunes of Eskom,” he said.

Ramaphosa tacitly warned of further economic reforms and cutbacks, which could see his government in a collision cause with labour unions.

But he called on South Africans to look ahead to the economic rising from its slump — if tough decisions are made now.

“The lower tax returns and Eskom have sucked out the money we needed to fund a number of programmes… We are facing a dire situation, but we’re not out. We are still on our feet and we intend to correct a number of areas where we will make things right, like Eskom and tax revenue.”

While the finance minister appeared more realistic of the economy, Ramaphosa cast a silver lining saying the economy and employment was growing, but not at a fast enough rate.

“We will resolve these problems, that I assure you,” he told MPs.