Manuel addresses global economic crisis
By Cindy Witten
11 February 2009
The National Budget is the Minister of Finance, Trevor Manuel’s, announcement of governments spending, taxation and borrowing plans for a period of three years. The annual budget speech is presented to the National Assembly in February each year and explores how government intends on raising money and how the money raised is spent.
In light of the current economic crisis, the world economy is in a terrible situation, many developed counties across the board, including the Britain, the United States and France are faced with recession. Thus, Manuel opened the 2009 Budget Speech discussing the financial melt down.
“The global economy is experiencing a sharp downturn, spreading from developed to developing countries,” said Manuel.
South Africa is not as negatively affected and it is therefore imperative that we keep it that way. Manuel said that in response to the crisis, governments have committed millions in funding to support their respective financial institutions. In this regard, our country is no different.
While borrowing money for financial aid may be the “correct policy approach to restore confidence” in world economies, Manuel adds that the money will eventually have to be paid back. In the long run, this will have a negative effect and slow down economic growth for future generations who will have to pay the money back, with interest.
He therefore says that government will have to address the root causes of the situation. In doing so, financial systems will have to be monitored and income must be distributed effectively.
“This means protecting the poor. It means employment and training. It means investing in infrastructure and building a competitive economy. It means sustainable public finances,” he said.