“This is a very crucial time in the country’s economy,” Democratic Alliance parliamentary leader Mmusi Maimane told reporters, a day ahead of Finance Minister Nhlanhla Nene’s tabling his 2014 medium-term budget policy statement before Parliament.
Maimane said South Africans were facing the toughest economic conditions since 2009, and Nene was facing significantly reduced revenue in his budget.
There was, therefore, every possibility of either cuts to the budget, or a “dramatically increased” budget deficit.
He called on Nene to show “bold leadership” and adopt steps on Wednesday to address the country’s economic situation.
“I think we should not deceive ourselves into believing everything is well… South Africa’s economy is stuck in low gear. Slow economic growth and high levels of unemployment, coupled with high inflation, are likely to continue for some time,” he said.
DA finance spokesman Dion George said the economic picture now was very different to the one sketched by former finance minister Pravin Gordhan in February this year.
At that time, predicted economic growth for 2014 was 2.7 percent.
“This figure has recently been slashed to almost half of that, with revised predictions by the International Monetary Fund and the SA Reserve Bank at 1.4 percent and 1.5 percent respectively.
“We might not even see that level of growth for this year,” he said.
Asked after the briefing whether there was real danger of the economy going into recession, George said if concrete steps were not taken this could happen.
“I think it [the possibility of recession] is very real, and I think if we don’t take steps now, we’re in very serious trouble.”
He said growth in the first and second quarters of this year — at minus 0.6 percent and 0.6 percent respectively — had essentially stood still.
“So there is a real threat. And also… if we don’t accelerate the economy fast enough, never mind being in recession, even if we grow at the projected rate as it originally was, just under three percent, it’s not fast enough.
“We’re not going to mop up the labour in the economy, and we are heading for very serious trouble. But it can be fixed, and I think what we need to do now is to see some concrete action.
“The time for talking about it is long gone,” he said.
In a position paper tabled at Tuesday’s press conference, the DA calls for a cut in “wasteful spending” by government, which it describes as “the biggest financial risk to South Africa at present”.
It further calls for an end to “hand-outs” to state-owned enterprises, cuts to the public sector wage bill, and the cutting of what it calls unnecessary government ministries.
The document notes that South Africa has one of the largest cabinets in the world — with more ministers than the United States, Germany and Japan — but the benefits of this were not clear.
George said that while it was necessary that government cut spending, this should not apply to spending on infrastructure and transport, which should be increased to help drive the economy and attract foreign investors.