The ANC and its minister of finance, Nhlanhla Nene, were totally unaware of the impending international economic carnage that hit the world like a tsunami this week.
This is apparent from a reply to a parliamentary question that the FF Plus’ parliamentary spokesperson on the economy, adv. Anton Alberts, asked Nene two weeks ago on 14 August 2015 regarding the possibility of a global economic crisis similar or worse than the one in 2008.
The shocking reply which the FF Plus received from Nene on Monday – the day that is now called ‘Black Monday’ on which the Rand fell to its lowest levels ever, was that government had no information that pointed to a crisis. The full question and reply follow below:
- Whether he (Nene) has any (a) research or (b) information at his disposal pointing towards the probability or inevitability in the near future of a global economic recession equivalent to or worse than the one in 2008, and more specifically in the period from August to November 2015 or early in 2016; if so, what (i) are the relevant details and (ii) prognosis is prescribed in order to buffer the country against this event;
- Whether the Government has any contingency plans in place to cope with such kind of events; if not, why not?
REPLY OF THE MINISTER:
- There is no research which points to a global slowdown in the magnitude of the global recession in 2008. Whilst global growth is not as fast as we would have hoped, growth continues, supported primarily by a recovery in growth in developed economies.
- The macroeconomic framework is designed to help the South African economy absorb shocks such as a global recession. Prudent fiscal policy ensures that we have a low enough debt to GDP ratio to borrow more in the event of a crisis; the inflation targeting framework allows interest rates to adjust to domestic and global settings, without negative implications for inflation expectations; the flexible exchange rate allows for the rand to adjust and for imports and exports to respond accordingly. The macro prudential framework in place helps to secure financial sector stability so that the knock-on effects of any global crisis will be mitigated, whilst our open and liquid capital markets encourage two-way flows of capital. Foreign currency reserves are in place to supply the market if required. The Government and the South African Reserve Bank maintain a close working relationship to ensure that in the event of severe market disruption, we stand ready to act in a cohesive and coordinated fashion.
Adv. Alberts says it is clear that government was not prepared for the events.
“How is it possible that the state with all its experts could not foresee the crisis? South Africa is completely exposed at a local level as our whole economy is poorly structured and is already experiencing an economic crisis of its own.
“This was largely caused by the ANC’s unworkable economic policies such as affirmative action and BEE and the endemic maladministration and corruption in government.
“The FF Plus picked up clear trends of huge international problems and in particular the over-heating of the Chinese economy. South Africa’s problems are indeed worsened by the fact that we are now over-exposed to China’s economy.
“The ANC was reckless and negligent and it is proven by this reply. It is characteristic of this government on all levels and they will be paying for this in next year’s election”, Adv. Alberts said.
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