By Phenyo Selinda
Johannesburg – The National Treasury Director-General (DG), Dr Duncan Pieterse, has reaffirmed the government’s commitment to fostering sustainable and inclusive economic growth. Speaking at the Bureau for Economic Research (BER) conference in Johannesburg on Wednesday, Dr Pieterse highlighted key strategies aimed at stabilising debt, investing in infrastructure, and supporting vulnerable households.
Strategies for Growth
“Our strategy for addressing the enormous challenges of accelerating growth, creating jobs, and reducing poverty relies on a clear and stable macroeconomic framework, implementing structural reforms, and investing in infrastructure,” said Dr Pieterse. He emphasised that these elements are essential for boosting growth and enhancing inclusivity, setting the economy on a more sustainable path.
Fiscal Responsibility and Infrastructure Investment
Dr Pieterse stressed the importance of generating more fiscal space by increasing revenue and enabling private sector participation. This approach is expected to lead to more productive public spending on infrastructure, creating a virtuous cycle that supports inclusive economic growth. “These efforts will also generate more fiscal space by increasing revenue, enabling private sector participation, lead to more productive public spending on infrastructure and create a virtuous cycle that supports inclusive economic growth,” he said.
Reflecting on Economic History
The BER conference provided a platform for Dr Pieterse to reflect on South Africa’s economic landscape, drawing from seven decades of survey data. The BER has been instrumental in providing critical primary data, economic insights, and forecasts, shaping economic discourse and policy decisions.
Structural Reforms
Government is committed to continuing with structural reforms to improve productivity and the competitiveness of the economy. These reforms aim to make it easier and cheaper for businesses to operate and invest in South Africa, ultimately supporting job creation and government revenue growth.
“Historically, we have seen strong linkages between microeconomic developments like energy provision and logistical capability and overall growth outcomes. We have witnessed declines in total factor productivity, which encompasses innovation, technological improvements, and more because of these binding constraints to growth,” Dr Pieterse explained.
Operation Vulindlela
To tackle these challenges, Phase 1 of Operation Vulindlela, a joint initiative between the Presidency and National Treasury, was launched in October 2020. This initiative aims to accelerate the implementation of structural and economic reforms to drive growth and job creation. By the end of Phase I, 94% of reforms were either complete or progressing well, with an estimated investment potential of R500 billion.
“Unlocking investment through reforms in the electricity sector is important to end load shedding and achieve energy security and will be the main driver of economic growth in the decade to come,” Dr Pieterse said. He also highlighted reforms in the logistics and telecommunications sectors, which aim to enhance network speed, quality, and reduce costs.
Looking Forward: Operation Vulindlela Phase II
As Operation Vulindlela moves into its second phase, Dr Pieterse emphasised the importance of maintaining momentum across key sectors and exploring new areas for growth. The focus will remain on improving productivity and competitiveness, ensuring that reforms have a lasting positive impact on the economy.
Infrastructure Investment
Investment in infrastructure is a top priority for the government. Efforts are being made to improve the infrastructure pipeline, execution, and financing. “Mobilising private sector resources to augment public sector capability and finances is necessary to fast-track the provision of infrastructure and improve effectiveness,” Dr Pieterse noted.
Various reforms have been initiated to encourage greater private sector participation, including changes to Public-Private Partnerships (PPPs) regulations and the Budget Facility for Infrastructure. These measures aim to accelerate private sector investment in critical areas such as energy and transport.
“Currently in the fiscal framework, planned infrastructure budgets are expected to increase at 4.9 per cent over the medium-term, driven by energy and transport. And we intend to improve on these efforts going forward,” he concluded
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