With international ratings agency Moody’s suggesting it is unlikely to downgrade SA’s sovereign risk rating in November, the Minerals Council South Africa yesterday said Finance Minister Tito Mboweni’s medium-term budget policy statement next month would be “a critical review point”.
While welcoming Moody’s stance, council chief executive Roger Baxter said he had noted the rating agency’s “close scrutiny of the way in which the government will actively deal with its growing debt burden, as well as how and when the promised institutional changes in state-owned enterprises will be effected”.
Baxter said a key focus should shift to “government implementing a number of serious structural reforms to get the economy back on track”.
Mboweni’s plan – the Economic Transformation, Inclusive Growth and Competitiveness: Towards an Economic Strategy for South Africa document – reflected “a serious effort to construct a practical long-term economic strategy based on the national development plan”.
Baxter said the document reflected “a holistic strategy with sequencing of interventions, timelines, sectoral implications and underpinned by economic modelling”.
He continued: “Importantly, this strategy reflects a coherent exposition of the far-reaching policy trade-offs … to get the South African economy back on a growth trajectory.
“It recognises that growth and competitiveness are interdependent, requiring substantial modernisation of network industries: electricity, telecommunications, transport and water. Preferably, private sector competition.”
Policy certainty was critical, “in particular … in the mining sector”.
He said: “A stable, predictable policy, regulatory and operating environment is needed for investment to thrive.
“Further, there is a need to streamline regulation and to move to smart tape, away from the current red tape by lowering corporate tax rates.
“[The plan] will need broad-based support within government and the private sector. And, there needs to be an urgency in implementation and delivery.”