South Africa needs to do what other nations do during times of economic weakness and come up with a recovery plan that grabs the imagination of investors and its people, Deputy President Cyril Ramaphosa said in an interview in Cape Town.
In his first comments since the release of finance minister Malusi Gigaba’s mid-term budget last week, Ramaphosa described the South African economy as “moribund”.
“We are facing a new situation,” Ramaphosa said Saturday. “A number of economies around us are growing, the world economy is responding very positively in terms of growth, but we are moribund and we need to come up with a plan that needs to take us out of this.”
South Africa’s rand slid to the lowest in almost a year after Gigaba painted a bleak picture of the state of the country’s finances, with the economy set to expand 0.7% this year, down from 1.3% predicted in the February budget. Yields on the nation’s bonds also rose as the projections raised the risk of further credit-rating downgrades, with the nation’s debt already rated junk by S&P Global Ratings and Fitch Ratings.
Lower growth and revenue will feed through to a higher budget deficit. The gap is expected to jump to 4.3% of gross domestic product in the current fiscal year, up from a projected 3.1%. The shortfall will probably stay at 3.9% of GDP for the next three years. That’s a break from the National Treasury’s past pledges to steadily narrow the deficit.
“We need to come up with something that grabs the imagination of our people and the markets, so that the markets can see that we are an economy that is worth investing in, because right now we have almost been facing a situation of an investment strike,” Ramaphosa said.
A former union leader and one of South Africa’s wealthiest black businessmen, Ramaphosa, 64, is running for the leadership of the African National Congress in December, a post that would make him the party’s presidential candidate in 2019 elections when President Jacob Zuma is due to step down. His main rival is former African Union Commission chairwoman Nkosazana Dlamini-Zuma, the president’s ex-wife and favored successor.
Ramaphosa has made the fight against corruption the centerpiece of his campaign and made attacks on Zuma, who’s been implicated in a series of scandals, including allegations that he allowed members of the Gupta family to loot billions of rand from state companies. Zuma and the Guptas, who are in business with the president’s son, deny wrongdoing.
“Companies are not investing in our economy. They are concerned about the political instability and so we have to reboot out economy,” Ramaphosa said.