Business leaders presented President Jacob Zuma on Tuesday with an eight-point plan that they believe will save South Africa from a damaging sovereign ratings downgrade to junk status and long-term decline.
The plan includes an acceptance of tax increases in Finance Minister Pravin Gordhan’s 2016-17 budget‚ but a plea that they be broad-based – that is an increase in value-added tax or the fuel levy rather than those that harm economic growth and investment. An increase in the marginal tax rates for wealthy individuals is also accepted as part of the plan.
The main question left hanging after Tuesday’s frank talks between Zuma‚ cabinet ministers and more than 100 chief executives is what the follow-through will be‚ both by Zuma in his state of the nation address and Gordhan in his budget.
Business expectations of both are high. Gordhan told the chief executives that the Treasury would evaluate the suggestions.
The talks focused on the crisis facing South Africa and the need for all sectors to pull together behind a united and confidence-inspiring plan. The businessmen and women interviewed were confident that if the plan was implemented‚ a credit ratings downgrade could be avoided.
The plan was drawn up by the country’s top chief executives under the leadership of Old Mutual chief executive in charge of emerging markets Ralph Mupita and Nedbank Group chief executive Mike Brown.
It includes concrete measures such as uniting behind a cohesive narrative and plan; over-delivery on fiscal consolidation; more effective management of state-owned enterprises by appointing‚ for example‚ professionals to their boards; accelerated public private-partnerships; a review of legislative implementation to ensure consistency and certainty; ensuring that labour legislation contributes to inclusive growth‚ especially of the youth; and the appointment of a standing anticorruption committee to combat graft in both the public and private sectors.
The plan includes a commitment by business to support the government in the tough actions needed to tackle its fiscal challenges.
Mupita said the government was “very receptive” to the plan‚ which would involve pain for business in the form of tax increases‚ and the government in the form of cutting expenditure to achieve its fiscal targets.
He said even though the proposals were of a long-term nature‚ they were likely to satisfy the credit rating agencies insofar as they aimed to enhance growth and were supported by the government and business.
“Certainly business is very hopeful. This is really a fight for South Africa’s future,” Mupita said.
Brown was confident the proposals would avert a downgrade. — BDlive
Eight-point plan to save SA economy
The plan includes an acceptance of tax increases in Finance Minister Pravin Gordhan’s 2016-17 budget‚ but a plea that they be broad-based – that is an increase in value-added tax or the fuel levy rather than those that harm economic growth and investment. An increase in the marginal tax rates for wealthy individuals is also accepted as part of the plan.
The main question left hanging after Tuesday’s frank talks between Zuma‚ cabinet ministers and more than 100 chief executives is what the follow-through will be‚ both by Zuma in his state of the nation address and Gordhan in his budget.
Business expectations of both are high. Gordhan told the chief executives that the Treasury would evaluate the suggestions.
The talks focused on the crisis facing South Africa and the need for all sectors to pull together behind a united and confidence-inspiring plan. The businessmen and women interviewed were confident that if the plan was implemented‚ a credit ratings downgrade could be avoided.
The plan was drawn up by the country’s top chief executives under the leadership of Old Mutual chief executive in charge of emerging markets Ralph Mupita and Nedbank Group chief executive Mike Brown.
It includes concrete measures such as uniting behind a cohesive narrative and plan; over-delivery on fiscal consolidation; more effective management of state-owned enterprises by appointing‚ for example‚ professionals to their boards; accelerated public private-partnerships; a review of legislative implementation to ensure consistency and certainty; ensuring that labour legislation contributes to inclusive growth‚ especially of the youth; and the appointment of a standing anticorruption committee to combat graft in both the public and private sectors.
The plan includes a commitment by business to support the government in the tough actions needed to tackle its fiscal challenges.
Mupita said the government was “very receptive” to the plan‚ which would involve pain for business in the form of tax increases‚ and the government in the form of cutting expenditure to achieve its fiscal targets.
He said even though the proposals were of a long-term nature‚ they were likely to satisfy the credit rating agencies insofar as they aimed to enhance growth and were supported by the government and business.
“Certainly business is very hopeful. This is really a fight for South Africa’s future,” Mupita said.
Brown was confident the proposals would avert a downgrade. — BDlive
Would you like to comment on this article?
Register (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Trending Now
Latest Videos