- Fitch ratings agency said President Ramaphosa’s economic stimulus package is unlikely to significantly boost economic growth in the country
- On Tuesday, Fitch said the rand’s recent nosedive will also hamper the effect of the package
- Ramaphosa unveiled his stimulus plan last week which includes a R400 billion infrastructure fund and an additional R50 billion in new funding and reprioritised spending
Fitch ratings agency has poured cold water on the effect President Cyril Ramaphosa’s much-vaunted multi-billion rand economic stimulus plan will have on economic growth in South Africa. On Tuesday, the agency said the plan would do little to encourage significant growth.
On Tuesday, Fitch said the plan would be hampered by the rand’s recent nosedive against major international currencies such as the US dollar. The agency added that many of the proposals in Ramaphosa’s plan would take time to implement and take effect and many of the proposals related to existing projects.
Fitch pointed out that the plan as it currently stood lacked clarity on certain areas such as the R50 billion which has been reprioritised from within the existing budget. The details of how the money will be spent will be clarified during the medium-term budget speech in October.
Briefly.co.za gathered that Fitch noted that if implemented correctly the reprioritised funding could spur moderate growth in the economy through a multiplier effect when combined with the R400 billion infrastructure development plan.
BusinessDay.co.za reported that Ramaphosa’s administration announced the stimulus plan last week after the government was surprised by the announcement that South Africa had entered a recession for the first time in nearly a decade.
Ramaphosa’s stimulus includes various measures as part of his stimulus plan, one of which is the easing of visa requirements which is squarely aimed at increasing the number of foreign tourists visiting the country.
This will provide South Africa with some much-needed foreign currency and should lead to increased job creation in this vital cog of the economy.
Other measures are aimed at job creation through reprioritising of public sector spending, improvements to the health and education systems, investing in municipal social infrastructure spending and enacting tangible economic growth policies.
eNCA.com reported that Finch has adjusted its economic growth outlook for South Africa during 2018/2019 from 1.7% and 2.4% to 0.7% and 2.1%.
The ratings agency has kept South Africa’s investment rating at BB+ citing a stable overall outlook for the country after meeting with business leaders from the private and public sectors.
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