Ramaphosa’s Stimulus Plan: One month later, where does it stand?
President Cyril Ramaphosa delivers his closing remarks at the Brics Summit in Johannesburg. (Photo: Deaan Vivier, Netwerk24)
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Fin24 starts a regular watch over the progress of President Cyril Ramaphosa’s economic stimulus plan, which he launched a month ago. South Africa is infamous for coming up with excellent policy plans which fall short on implementation.
This is where we come in. By tracking, we will keep you abreast of whether this plan is on track to deal with an economy still in recession and an unemployment rate that jumped even higher last week.
To draw up this first tracker, we used information from the medium-term budget policy statement, and also sought answers from the Presidency.
Centralised infrastructure fund run from the Presidency
No response on whether it is established.
Infrastructure Execution Team started
No response on whether it has started its work. However, the budget policy statement says the Development Bank of Southern Africa, the Government Technical Advisory Centre and the Presidential Infrastructure Coordinating Commission will receive R625m to strengthen project preparation.
Infrastructure plan capitalised with R400bn over three years
R15bn is set aside in the revised budget to go toward infrastructure spending through reprioritisation.
The medium-term budget policy statement says, “Over the next three years, public infrastructure expenditure is estimated to be R855.2bn, of which state-owned companies account for R370.2bn.”
The infrastructure drive will draw in private capital
The budget policy statement says, the infrastructure initiative announced by the President builds on efforts to transform public infrastructure provision. It will support projects with “blended” finance, combining capital from the public and private sectors, and development finance institutions. Work to design the fund is underway, with assistance from the private sector and multilateral development bank.
They are working on an infrastructure project preparation facility; will publish online expenditure reports of current infrastructure projects.
Infrastructure refurbishment in 57 priority pilot municipalities
No response on which municipalities.
Reprioritisation of spending
Done. Spending has been reprioritised largely from unspent funds to fund the start of the stimulus plan.
The medium-term budget policy says: “Despite spending pressures materialising, the expenditure ceiling remains intact as the anchor of fiscal policy. The consolidated budget deficit narrows from 4.2% in 2019/20 to 4% in 2021/22. Gross debt is expected to stabilise at 59.6% of GDP in 2023/24.”
Extension of Employment Tax Incentive
Done. The Jobs Summit resulted in an agreement to extend the employment tax incentive, due to lapse in 2019, for 10 years. The incentive, which encourages the hiring of younger workers, supported about 690 000 jobs in the 2016 tax year.
Review administered prices
The medium-term budget policy statement says, “[M]iddle-income households are contending with higher prices for water, electricity and transport”. It also says administered prices will be reviewed, but electricity tariff increases are likely to be stratospheric over the medium term. The budget statement does not give a time frame for the review of administered prices.
New national minimum wage
Still being negotiated.
Expand VAT exempt basket
Government proposes zero-rating of white bread flour, cake flour and sanitary pads from 1 April 2019.
Township and rural entrepreneurship fund
R668m budgeted over the medium term to revitalise industrial parks in townships. Work has started on five of these.
2 200 critical health posts to be filled.
In progress. R1.7bn budgeted over three years for hospital equipment and for hiring doctors and other medical staff.
In progress. The mining charter is being finalised. Mineral and Petroleum Resources Amendment Development bill has been withdrawn.
Ramaphosa pledged to resolve land reform and land expropriation without compensation.
In progress. An expropriation bill is almost completed to be tabled in Parliament before it prorogues. A Goldman Sachs report says it believes the land expropriation without compensation policy shift is unlikely to happen before the 2019 election.
30-year leases to farmers
The advisory panel on land reform
In progress. This has been constituted.
Spectrum allocation to bring down the cost of broadband
In progress. The Department of Telecommunications and Postal Services has gazetted a proposed policy for the licensing of the high-demand spectrum. Frequencies to enable high-speed Internet will be auctioned early next year.
But interviews with the telecommunications industry by Fin24 reveal there is no guarantee that freeing up spectrum will result in lower broadband costs.
Tourism and transport
Visa regulations are being amended to boost tourism.
Verdict: Ramaphosa’s team has made good progress in a month and the Treasury created a new budget architecture to cater to the central ideas in the stimulus plan.
• We’d love to hear your thoughts on whether the stimulus plan is having an effect. Tweet the writer on @ferialhaffajee or email us at [email protected]
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