Mangaung slows policy implementation in SA

The ANC will go to Mangaung to elect its president next month – a crucial moment firmly in the sights of investors looking to gain clarity on the country's economic policy direction.

Speaking to business leaders at the Nelson Mandela Bay Stadium on the bank's latest monetary policy review yesterday, Kahn said over and above the global economic outlook, it was concerned about the policy uncertainty leading up to the conference.

"We are obviously independent and we do not define economic policy but we are concerned that there seems to be a policy paralysis. The government has not come out forcefully about what they are going to do with various proposals. There is talk about transport infrastructure for example but there is no real movement. We don't see any tenders going out.”

Kahn, who is also advisor to Reserve Bank governor Gill Marcus, said: "It seems the conference has overshadowed the implementation of decisions. We are looking at what infrastructure plans there are. But planning is one thing – we need to see something actually happening. So we are hoping to get Mangaung behind us and the government can actually start to implement its plans and we could have a more positive outlook.”

Kahn's comments came as the International Monetary Fund (IMF) told parliament yesterday there was greater urgency for the government to restore and maintain investor confidence.

The impact of the mining industry strikes, the weaker fiscal position of the government and the deterioration in the global economy all supported the need for restraint in the growth of the public-sector wage bill so the government could invest more in infrastructure, the IMF said.

Finance Minister Pravin Gordhan estimated that the strikes in the mining sector could cost the economy about R12.5-billion in export revenue.

The head of the IMF's Southern African division, Calvin McDonald, said recent downgrades in the credit ratings of South Africa by Moody's and Standard & Poor's had taken a toll on its international reputation and contributed to the weakening of the rand.

The downgrades were based on the country's lower growth prospects and a loss of confidence in the authorities' ability to maintain fiscal policy. - Additional reporting by I-Net Bridge