DA to call for urgent debate on state of SA economy
20 August 2014
The DA will, in terms of rule 103 of the Parliamentary rules, call for a debate of public importance on South Africa's economy following the downgrades of our four major banks by Moody's rating agency and the collapse of African Bank.
Yesterday, Moody's rating agency downgraded the credit ratings for Standard Bank, ABSA, FNB and Nedbank, following last week's rescue of African Bank by both the National Treasury and the Reserve Bank.
It is arguable whether the downgrade was justified based on the banks' financial stability. But what is certain, is that international sentiment is turning negative on South Africa's economic outlook. This is a significant problem and is rooted in our relative under-performance in economic growth and job creation.
Indeed, the Governor of the Reserve Bank previously cautioned on our deteriorating economic outlook. We have also seen broad unemployment force its way to 35.6% - meaning 7 573 000 South Africans are at home with no income.
All of this points to the reality that South Africans are experiencing difficulty in their personal finances. It is therefore not surprising that the first high-profile casualty was African Bank - borrowers are struggling to repay their loans and our banking supervisors' capacity to detect and address problems with the sector is in need or urgent discussion.
The recent downgrades of all major South African banks will raise the risk profile of South Africa, branding our economy a less attractive investment destination and stifling economic growth as investors seek more lucrative opportunities elsewhere.
It is abundantly clear that urgent action is needed.
Government can facilitate economic growth if it positions itself into the appropriate space by following the market driven planning as contained in the NDP.
Currently, incoherent economic policy has resulted in government paralysis, stagnating the economy and leaving government unable to break our economy free from laws and regulations that only serve to preserve the deteriorating status quo.
Plans to expand the Post Bank so that it can offer even more unsecured loans and plans to offer more capital to the Development Bank for projects with questionable yields does not inspire the confidence that a robust economy requires.
Parliament must act swiftly to start moving our economy towards the path of growth and job creation. We must act now.
Statement issued by Dr Dion George MP, DA Shadow Minister of Finance, August 20 2014
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