Government has to implement National Treasury's economic blueprint for the country, despite opposition to it, if South Africa is to attract domestic and foreign investment, boost export performance and be globally competitive, deputy finance minister David Masondo has said.
Masondo was addressing JP Morgan's South Africa Opportunities Conference on Monday morning at the Vineyard Hotel in Cape Town. Finance Minister Tito Mboweni released the economic strategy document for South Africa in August.
Treasury previously said that if the proposals contained in the paper Economic Transformation, Inclusive Growth and Competitiveness: Towards an Economic Strategy for South Africa are implemented, annual economic growth could be raised by up to three percentage points and one million jobs created.
However, the policy document faced resistance from some quarters, with the governing African National Congress’ labour federation ally, the Congress of South African Trade Unions, among its most vocal critics.
Speaking on Monday, Masondo emphasised the need to act quickly.
"This is the time for implementation! The extent to which I will talk about plans and strategies today, would simply to contextualise and remind ourselves on what we should implement in order to create sustainable and inclusive growth in South Africa," said Masondo.
Masondo also spoke frankly about the impact of the public sector wage bill, state-owned enterprises and debt-service costs, saying these were major obstacles to sustainable and inclusive growth in South Africa.
"Allow me to be open with the fact that it will take a close working partnership between government, investors, corporates and labour unions to find solutions to these challenges; and to implement these solutions," Masondo said.
Masondo said the R50bn in spending reductions in the next two years that National Treasury identified, to contain spending that grows no more than in-line with consumer price index, would not be enough.
"A primary balance will also require an additional R150bn in reductions. As a matter of policy we have also decided that this should not come from service delivery and investment components of spending," he said.
Masondo said, as solutions, the recently released government Economic Strategy for South Africa does not only focuses on reducing the costs of living and improving the competitiveness of our network industries to reduce the costs of doing business in South Africa.
In addition to stressing that the reforms proposed by Mboweni must be implemented, Masondo also underlined the importance of improving governance at state-owned entities such that they generate revenue for government instead of consuming funds.
He added that sovereign credit rating agencies' outlooks for South Africa worsened recently and only implementation of much-needed reforms would turn this trend around.