President Cyril Ramaphosa is pressing for spending cuts to breathe new life into the country’s faltering economy.
- President Cyril Ramaphosa is pressing ahead with spending cuts to revitalize the faltering economy, the presidency said.
- The public sector wage bill is one of the factors that the government is expected to reduce.
- The presidency said the “reforms” would be implemented over the next nine months.
“South Africa’s unsustainable public debt levels of R4.7 trillion, including low growth rates, have forced President Cyril Ramaphosa to consider reducing the size of government to stabilize the economy,” the presidency told News24.
This came while the public sector union claimed that 80,000 government jobs would be eliminated, describing this move as “insane.”
Presidential spokesman Vincent Magwenya said on Tuesday that public sector spending will be cut over the next nine months to “restore confidence and strengthen the growth strategy going forward.”
Magwenya said:
Work is continuing to reshape the government; Necessary consultations are underway and will continue as required with a wider range of stakeholders, including workers.
He was responding to a recent report in the Sunday Times that the Cabinet had tasked National Treasury “to work with all government departments and relevant stakeholders in [the] The national government, as well as with the provinces, to identify immediate measures to reduce the level of government spending.”
Magwenya added that the cuts were necessary due to “unsustainable public debt levels due to stagnant GDP growth.”
He said the Covid-19 pandemic has affected spending and revenue collection, while the economy has been hampered by “a simultaneous growth and unemployment crisis; low growth due to low levels of fixed investment, economic concentration, inefficient railways and ports, and high cost”. Doing business, among other shareholders.”
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On September 5, the Treasury announced that the economy grew by a higher-than-expected 0.6% between April and June after expanding by 0.4% in the first three months of the year, well short of the 5% growth rates the government said it needed. Reducing the unemployment rate to 32.6%.
Magwenya admitted that the country’s freight rail system was in turmoil and affected economic growth. This was echoed by parastatal logistics company Transnet, which reported a staggering loss of R5.7 billion in its last financial year due to lower volumes transported due to crumbling infrastructure.
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But the South African Public Service and Commercial Union (PSCU), in a statement to News24 on Tuesday, claimed the government was “crazy to get rid of 80,000 public servants”, adding that if the planned cuts went ahead, it would be closer to… Cut the meat, not the fat.”
PSCU Vice President Astrid El-Anani said:
Over two decades of lack of accountability for billions of rands lost due to corruption and mismanagement of funds, no similar attention has been received. The same corrupt government is now delivering devastating news of the jobs bloodbath to public servants through leaked media messages.
Cosatu also rejected the expected job cuts, saying that although the union “appreciates” the country’s fiscal constraints, the Treasury was “reckless” in recommending job losses during a bleak economic period.
In his February budget, Finance Minister Enoch Godongwana said the country’s debt stood at R4.7 trillion, supporting Cosatu’s view that the state’s financial position is weak.
However, Cosatu added: “What we need now is to grow the economy. This is the only sober way to pay off our alarming debt trajectory. Crippling underpaid nurses and police officers is not a solution.”
But Magwenya said the government was implementing a range of reforms – including a social relief grant (payments of R350 to unemployed adults) and amendments to electricity regulation allowing private power generation to stem blackouts – to “restore efficiency and competitiveness to key industries”. supply chains”.
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“So, based on the assessment of progress and analysis of the global and domestic environment, the President is directing the focus on actions the government must take to decisively transform the country’s growth trajectory. The President wants more momentum for the second wave of reform which will make a profound and lasting difference,” Magwenya said.