Continuing focus on poverty, unemployment - Manuel
21-OCT-08
By Michael Appel
The current economic storm prevailing on global markets will not deter government from focussing on its fight against persistent challenges of poverty and unemployment.
“Our challenges are to eliminate poverty, to raise employment, to broaden opportunity and to improve the lives of all, particularly the most disadvantaged among us.
“We will remain focused on meeting these challenges during the present storm and beyond,” said Finance Minister Trevor Manuel.
The minister was delivering the Mid-Term Budget Policy Statement (MTBPS) in Parliament on Tuesday.
The structure and framework of the budget reinforces that government will be focussing on striving to attain faster economic growth, higher levels of investment, rising employment and reduced levels of poverty.
The MTBPS, which is a three year guideline to government expenditure, prioritises education, health care, fighting crime, rural development and extending access to housing, water, sanitation, electricity and public transport.
Mr Manuel highlighted government’s commitment to putting people first and to adopting policies that support growth and development.
“The world is experiencing a financial crisis on a scale not seen since the 1930s. The prospects for global growth are poor and the short-term outlook is clouded by uncertainty.
“However, South Africa’s longer-term economic expansion rests on sound economic policies, healthy public finances and resilient financial institutions,” the minister told Parliament.
The healthy state of South Africa’s financial sector relative to that of the United States, Germany, Britain, among others, will help the country escape the worst effects of the global economic downturn, Mr Manuel said.
Lower domestic growth prospects due to decreasing export demand, financial volatility, exchange rate fluctuations and uncertain economic conditions in the future will, however, have an affect on South Africa’s emerging market economy.
The world is facing an economic crisis last seen when panic selling led to the crash of Wall Street in 1929 spurred on by financial institutions’ excessive credit extension to unworthy consumer.
While developed economies are cash strapped as major banks continue to be hesitant to lend to each other, it is the emerging markets who will bare the brunt of the liquidity crisis, economists believe.
Risk aversion has caused massive foreign investor capital flight, plunging currencies in emerging markets to record lows.
The Rand itself has registered some of its greatest loses in recent times dropping to more than R10 to the Dollar. The economic crisis is also affecting South Africa’s primary driver of the economy, the commodities sector.
As the fear of a global recession sets in, demand for gold, platinum, oil, diamonds, copper and other commodities has decreased leading to a drop in commodity prices across the board.
“The proposed fiscal framework for the 2009 Budget takes into account both slower economic growth and the need to support continued infrastructure investment and social development in a context of heightened uncertainty,” the minister said.
- BuaNews
