South African President Cyril Ramaphosa announced a raft of policy reform plans on Friday, including re-prioritising 50 billion rand ($3.5 billion) of public spending to boost economic growth and create jobs.
Africa’s most industrialised economy entered recession in the second quarter for the first time since 2009, in a blow to Ramaphosa’s pledge to turnaround the economy after a decade of stagnation.
Ramaphosa fell short of announcing a stimulus package, saying there was no room to increase spending or borrowing.
“We have to resort to re-prioritising our budget and our spending,” Ramaphosa said in Pretoria.
“The central element of the economic stimulus and recovery plan is the reprioritisation of spending towards activities than have the greatest economic effect.”
Ramaphosa also said the government would launch a 400 billion rand infrastructure fund.
After an initial rise following Ramaphosa’s election as African National Congress leader in December and state president in February, business confidence has wavered, falling to a one-year low with investors concerned about land and mining ownership reforms.
Ramaphosa said the country’s economy would be put on a firmer footing by the measured he announced on Friday.
Finance Minister Nhlanhla Nene added at the same media briefing that funds for the financial intervention would be found from under-performing government programmes, without giving any details.