DUMA GQUBULE: Spending has to be stimulated in depressed economy
You cannot have a fiscal stimulus within the context of an austerity budget
Sometimes, I wonder about the quality of advice President Cyril Ramaphosa is getting on the economy. On September 4 2018 Statistics SA announced that the country had slipped into recession during the second quarter of the year. Almost three weeks later Ramaphosa announced a stimulus and recovery plan that had no stimulus. The five-point plan had three measures aimed at boosting infrastructure spending. The government would reprioritise R50bn of public spending to support job creation and establish a R400bn infrastructure fund. It would also invest in municipal social infrastructure, but no financial details were provided. “The reprioritisation of spending we are outlining as part of this stimulus and recovery plan will take place within the current fiscal framework and in line with the normal budgetary process,” he said. Since the fiscal framework included austerity measures that were announced in the budget in February 2018, it soon became clear that there was no stimulus. A fiscal...
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