The spending of R787 billion on capital projects by the state and its enterprises should be defended “as far as possible”, Trade and Industry Minister Mandisi Mpahlwa told a media briefing in Cape Town this week.
Mpahlwa backtracked on an earlier remark that capital spending over the medium term might have to be scaled back to about R620 billion.
Referring to the earlier statement, Mpahlwa said: “The point we were making, in the uncertain circumstances in which we are making this commitment, is that there may be a slight drop in this number, but we are not saying this is going to happen.”
He said he had “made the mistake” of putting a number to his illustration of the point that financing was inevitably going to be difficult.
Late in February, after meeting a Nedlac task team appointed to find ways to ameliorate the economic meltdown, Mpahlwa said money had “become more expensive” as South Africa prepared to approach the capital markets.
Flanked by trade unionist Ebrahim Patel and Eskom chairman Bobby Godsell, he explained that this would make it more difficult for the government to spend the R787&nbbsp;billion targeted by Finance Minister Trevor Manuel. The figure could be revised down, he said. “It may be R620 billion.”
To emphasise the point, he noted that the full programme might have to be spread over more than three years.
Yesterday, however, he said the government had expected that much of the spending would be financed by the parastatals “using their own balance sheets” or by raising funds on the capital markets.
With the latter being “virtually closed” to providing capital, it was proving “a lot harder to finance that programme”.
He said the government would “have to do what we can to maintain our infrastructure investment programme”.
Speaking on behalf of the economic cluster of ministries, which includes public enterprises, minerals and energy, labour, finance, and trade and industry, Mpahlwa said a first draft of an integrated infrastructure plan had been submitted to the cabinet “and further work is under way to complete this work as soon as possible”.
He added: “The aim of this plan is to ensure that policies, strategies and infrastructure plans of various sectors in government are co-ordinated and optimised to support overall government objectives rather than just sectoral imperatives.”
PUBLICATION: Businesss Report
AUTHOR: Donwald Pressly
DATED: 12th March 2009