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South African President Cyril Ramaphosa must provide details on how his plan to restart an economy hit by the coronavirus will be financed through increased spending on infrastructure, former President Thabo Mbeki said.
Ramaphosa’s economic plan, based on boosting project spending and investing in new power generation projects, does not provide details on how it will be financed, Mbeki said in an article published in the Sunday Times.
The program launched last month runs the risk of being a “mere vision until the resources are available to allow its implementation,” according to Mbeki, under whose nine years in office the South African economy had its longest period of expansion since the end. of the Second World War.
Ramaphosa’s proposal on job creation “has very little substance,” said Mbeki, who succeeded Nelson Mandela in 1999.
Ramaphosa’s economic plan was developed with business and labor groups and includes the government spending 100 billion rand ($ 6 billion) on new infrastructure over a decade, a venture the president hopes to attract another trillion rand of investment. private in four years.
Mbeki, a member of the African National Congress, said Ramaphosa’s remarks on the financing of the projects are “worrying” and implored the government to publish a financing plan that is “realistic and credible.”
The document should indicate how much capital would come from the public and private sectors, he said.
“This is important because the country suffers from serious fiscal restrictions,” Mbeki said. “The cost of the loans would be quite high given the sovereign rating downgrades and serious uncertainties about the future.”
Africa’s most industrialized economy was already stagnant before the coronavirus hit and almost came to a halt after a lockdown was imposed in late March to slow its spread. Political conflicts over the past decade have worsened investors’ risk aversion to South Africa, Mbeki said.
“There has been a sustained and continuous process of exporting capital,” Mbeki said. “This has not been for the mere purpose of diversifying portfolios, but rather a step towards relocating the companies and entrepreneurs involved.”
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