- On Tuesday, Finance Minister Nhlanla Nene said he was confident that the current technical recession would not be long-lasting
- Nene said he felt confident that a stimulus package and structural economic reforms which are due to be tabled in October would restart the economy
- The finance minister said the cabinet was working on introducing a reform package which he was certain would boost the economy
On Tuesday, Finance Minister Nhlanla Nene said he was confident that the current technical recession would not be long-lasting. Nene said he felt confident that a stimulus package and structural economic reforms which are due to be tabled in October would restart the economy.
Nene said cabinet was working on the introduction of an economic reform package which will bring real structural and much-needed changes to the economy and in Nene’s opinion restart the economy and lead to growth.
Nene said the economic figures which were released on Tuesday were disappointing and admitted that while the government was not totally surprised by the news it had been caught somewhat off-guard by the contraction in the second quarter.
Briefly.co.za gathered that Nene will deliver the Medium Term Budget Policy Statement (MTBPS) in Parliament in October. This will be Nene’s first major policy since being reappointed by President Cyril Ramaphosa.
The MTBPS serves as a roadmap for the government’s spending plans and economic vision for the next 36 months.
TimesLive.co.za reported that Nene admitted that the controversial VAT increased announced by former finance minister Malusi Gigaba earlier this year had played a role in the recession. Nene said the increased VAT rate had led to decreased consumer spending which had directly contributed to negative growth.
Nene is currently in China as part of Ramaphosa’s delegation at the Forum on China-Africa cooperation. The trip has also been used to secure investment deals with the Chinese government and Chinese corporations.
Nene urged South Africans to remain calm and not to panic about the state of the economy. He said the government would unveil its counter-measures to the recession at the MTBPS.
EWN.co.za reported that Nene said he did not believe the economic contraction had anything to do with the uncertainty which has been caused by the current land reform debate which is raging in the country.
The technical recession means Ramaphosa has started his presidency in the same manner as former president Jacob Zuma who also had to deal with a technical recession within six months of taking office.
That was the last time the South African economy has been in a technical recession, although growth has been sluggish and relatively flat for some time. One of Ramaphosa’s key concerns upon taking power was restarting the stalled economy.
The rand has continued to plummet against the US dollar. According to Fin24.com figures the local currency was trading at R14.85 at the start of trading on Tuesday but dropped to R15.22 after the economic data was released.
The currency was trading at R15.57 at 10:00 on Wednesday.
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