South African economy faces ’serious danger’: MotlantheFebruary 6th, 2009 - 11:18 pm ICT by IANS
Johannesburg, Feb 6 (IANS) Delivering his first state of the nation address here Friday, South African President Kgalema Motlanthe said that the global financial crisis posed a serious danger to the country’s economy and the government was considering measures to minimise its impact. “Firstly, government will continue with its public investment projects, the value of which had increased to 690-billion rand ($70 million) for the next three years. In this regard, where necessary, we will find creative ways to raise funds,” he said, the South African news agency BuaNews reported.
This would include support by South Africa’s development finance institutions and loan from international agencies, as well as partnership with the private sector and utilisation of resources controlled by workers such as pension funds, Motlanthe said.
“With the economic crisis, lower demand has precipitated a scaling down of production; the creation of jobs is negatively affected and in some sectors retrenchment has become a reality. These difficulties have coincided with a period in which inflation and interest rates are still too high,” he said.
“We need to expand the provision of services and to implement our infrastructure projects. As such, countries and South Africa have been forced to tone down our forecasts in terms of growth and job-creation.”
“Secondly, we will intensify public sector employment programmes. On the one hand, plans to expand employment in sectors such as health, social work, education and law-enforcement agencies will continue. On the other, we will speed up the introduction of the next phase of the Expanded Public Works Programme.”
The government would adapt industrial financing and incentive instruments to help deal with challenges in various sectors, and also encourage development finance institutions to assist firms in distress because of the crisis, he said.
Other alternatives are also to be explored, the president added, including longer holidays, extended training, short time and job-sharing. This would be combined with promoting the ‘Proudly South Africa’ campaign and stronger action on illegal imports.
The government would sustain and expand social spending, including progressively extending access to the child support grant to children and reducing the age of eligibility for old age pension to 60 years for men.
President Motlanthe added that the government would also ensure that the levels of borrowing by government were prudent and sustainable.