We will survive meltdown

 

October 24, 2008

Zululand OBSERVER

	We will survive meltdown Ronelle Ramsamy WHILE the current global economic meltdown is fiercer than anticipated and its course hugely unpredictable, South Africans have been somewhat cushioned from the worst effects of the worldwide crisis. Delivering his 11th medium term budget policy statement in Parliament on Tuesday, Finance Minister, Trevor Manuel reassured the country that sound fiscal policies over the past 14 years meant the local economy would withstand the economic turbulence. He said low levels of debt and a prudent approach to fiscal policy allowed for room to adjust policies and relatively insulate the economy against the storm. But, Manuel clearly outlined that there was no avoiding the storm. He warned that slower global economic growth for several years would negatively affect the country's export earnings and make it more difficult finance investment needs. 'Following four years of economic expansion of 5% a year, the revised GDP growth estimate for South Africa for this year is 3.7%, somewhat below our forecast of 4% in February. 'Next year, we expect to grow by 3%, accelerating moderately in 2010 and beyond, as the global economy begins to recover. 'Navigating our way in this changed economic environment will be tougher, but we will continue to expand and improve public services, and invest in the infrastructure required for future growth.' Additional spend Manuel also announced an additional spend of R171-billion on top of February's budget plans - which will take total proposed spending over the next three years to R2.4-trillion. 'The additional allocations include adjustments amounting to R59-billion over the next three years for higher salaries and other costs associated with the rise in inflation. 'Over R60-billion is allocated to new programmes or expanded spending on key priorities. 'As indicated in February, an amount of R10-billion this year and a further R50-billion over the period ahead will be provided as a loan to Eskom to support its capital spending programme.' Manuel said the electricity levy he announced in February would now only come into effect next July, and that its net would be widened to include industries pumping out greenhouse gas emissions. In addition, the Finance Minister made it clear that inflation targeting would remain. He predicted inflation to fall this year due to falling oil prices and a slower rate of increase in the cost of food, and come back within the 3 to 6% target band towards the end of next year. He also expected to post a budget deficit of 1.6% next year - due to a decrease in tax revenue as a result of the economy slowing but said there would be relief for hard-pressed taxpayers in next year's budget. Key spending priorities include: • Improving the quality of education and skills development to broaden opportunities and raise levels of productivity. • Improving the provision of healthcare, with particular emphasis on reducing infant, child and maternal mortality and broadening prevention and treatment programmes tackling TB and HIV/AIDS • Investing in the criminal justice sector to reduce levels of crime and enhance citizen safety. Key priorities are to further expand police numbers and to invest in investigative capacity, forensic laboratories and enhanced IT network infrastructure. • Expanding investment in the built environment to improve public transport and meet universal access targets on water, sanitation, electricity and housing. • Decreasing rural poverty by taking steps to raise rural incomes and improve livelihoods by extending access to land and support for emerging farmers.