South African President Cyril Ramaphosa must provide details for how his plan to reboot an economy battered by the coronavirus through increased spending on infrastructure would be financed, former President Thabo Mbeki said.<\/p>\n
Ramaphosa\u2019s economic plan, anchored around boosting spending on projects and investing in new energy generation projects, doesn\u2019t provide details on how its going to be financed, Mbeki said in an article published in the Sunday Times.<\/p>\n
The program launched last month risks being a \u201cmere vision until resources are made available to enable their implementation,\u201d according to Mbeki, under whose nine years in office the South African economy had its longest period of expansion since the end of World War II.<\/p>\n
Ramaphosa\u2019s proposal on jobs creation \u201chas very little substance,\u201d said Mbeki, who succeeded Nelson Mandela in 1999.<\/p>\n
Ramaphosa\u2019s economic plan was drawn up with business and labour groups and includes the government spending R100 billion\u00a0 ($6 billion) on new infrastructure over a decade — an undertaking the president expects to attract a further 1 trillion rand of private investment within four years.<\/p>\n
Mbeki, a fellow member of the African National Congress, said Ramaphosa\u2019s statements on funding for the projects are \u201cworrying\u201d and implored the government to publish a financing plan that\u2019s \u201crealistic and credible.\u201d<\/p>\n
The document should indicate how much capital would come from the public sector and the private sector, he said.<\/p>\n
\u201cThis is important because the country suffers from serious fiscal constraints,\u201d Mbeki said. \u201cThe cost of borrowing would be quite high given the sovereign rating downgrades and serious uncertainties about the future.\u201d<\/p>\n
Africa\u2019s most-industrialized economy was already in the doldrums before the coronavirus struck and ground to a near halt after a lockdown was imposed in late March to curb its spread. Political strife during the past decade worsened investors\u2019 risk aversion to South Africa, Mbeki said.<\/p>\n
\u201cThere has been a sustained and continuing process of the export of capital,\u201d Mbeki said. \u201cThis has not been for the mere purpose of diversifying portfolios but a step toward the relocation of the businesses and business people concerned.\u201d<\/p>\n