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South Africa seeks austerity cure

Wednesday, February 24, 2016 - 01:16

South Africa announces an austere budget aimed at avoiding cuts in its credit ratings, and vows to focus spending on priority areas after weak economic growth reduced its revenue. David Pollard reports.

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It was the very model of a healthy economy to which the rest of Africa could aspire. Now, though, seeking a painful austerity remedy for its ailments. On top of weakening growth and unemployment, add the drought that's blighting its agriculture. South Africa's finance minister is Pravin Gordhan. (SOUNDBITE )(English) MINISTER OF FINANCE, PRAVIN GORDHAN, SAYING: "In our own region, weaker business confidence coincides with the severe drought, bringing with it rising prices and threats to water supply in many areas. In addition we have to confront the impact of slow growth on our public finances, while continuing to respond to the expectations of citizens and communities for improved education, reliable local services and responsive public administration." Growth for 2016 is expected to slip under one per cent. Way below, said Gordhan, what's needed to reduce poverty and inequality. For this budget, he outlined spending cuts, a civil service jobs freeze and tax hikes. That - after years of joblessness and industrial unrest - and just this week the eruption of a new round of race-related violence in universities - could be a risk ... Turning voters away in a year when the ruling ANC faces a stiff test in municipal elections. But credit ratings agencies may like the austerity package - another downgrade from them could push South Africa to junk status. Though they may want to study a Treasury plan to borrow 4.5 billion dollars from global markets before they decide.

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South Africa seeks austerity cure

Wednesday, February 24, 2016 - 01:16