Budget focuses on export growth

2 Mar 2001 - By Staff reporter

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Special emphasis on African
investment, writes Ed Richardson

FINANCE MINISTER Trevor Manuel has delivered a budget which, he says, is focused decidedly towards promoting growth and strengthening investment.
His eyes are firmly on export growth. The global expansion of South African firms holds significant benefits for the economy - expanded market access, increased exports and improved competitiveness, Manuel told Parliament in his 2001 budget speech last week.
The success of the manufacturing sector is shown by the fact that non-gold merchandise exports rose from 11,5% of GDP in 1990 to nearly 19% in 2000.
A rising contribution is also made to our export earnings by tourism and related services sectors, he said, announcing further incentives for local firms to expand globally.
The limit on the use of South African funds for new approved foreign direct investment was increased from R50 million to R500 million.
Special emphasis is laid on African investment.
As part of Government's commitment to African economic recovery, South African firms will be permitted to utilise up to R750 million of local cash holdings for new approved foreign direct investment in Africa.
In addition, firms will continue to be able to use local cash holdings to finance up to 10% of the remaining investment outlay.
The main budget provides for expenditure of R258,3 billion in 2001/02, increasing to R297,5 billion in 2003/04.
Revenue increases from R233,4 billion to R273,1 billion over the same period.
A deficit of 2,5% of GDP is anticipated on the main budget in 2001/02, falling to 2,1% of GDP in 2003/0, says Manuel.
These forecasts are based on the continuing success of South African exports.
Our economic prospects are inextricably linked to developments in the global economy.
Fair trade and access to markets are fundamental to sustainable growth and development. It is shameful that so many of the wealthiest countries in the world persist with barriers to trade and protective subsidies, effectively excluding millions of producers in poor countries from the benefits of global trade.
It is estimated that the value of their tariff protection is something like $1 billion a day. The common agricultural policy of the European Union and similar protectionist measures are exceedingly damaging for developing countries.
It is now critical that the next multilateral trade round should get under way, and should address these injustices decisively, he said.