South Africa needs to rethink austerity: finmin
JOHANNESBURG – South Africa cannot rely on austerity measures to reduce public debt and boost economic growth, as previously thought, Finance Minister Pravin Gordhan said on Tuesday.
Gordhan has been trying to find a balance between reining in spending to contain South Africa’s budget deficit and avoid credit rating downgrades, while also finding ways to boost economic growth and provide basic services to the poor.
“What’s very clear is that austerity, which we in some parts of the G20 thought was absolutely necessary … is no longer the answer,” Gordhan told business leaders.
“In South Africa, as well, we have some austerity fans amongst our public commentators and its time to rethink.”
Africa’s most developed economy is barely growing after a drop in commodity prices crippled the mining sector, a severe drought hammered farming output and policy uncertainty spooked investors.
The ruling African National Congress will face tough competition in local elections next week with all parties campaigning on promises to tackle high unemployment and deliver better lives for millions of poor people.