Pretoria - Despite risks in the global economy, Finance Minister Nhlanhla Nene says South Africa is committed to the G20 Summit’s two percent Gross Domestic Product (GDP) growth target by 2018.
After two days of discussions, leaders of 20 major world economies reaffirmed their pledge in overcoming geopolitical tensions and financial risks to spur global growth by an additional 2 percent above current projections over five years and create jobs.
"This year we set an ambitious goal to lift the G20's GDP by at least an additional 2 percent by 2018," reads a communique, issued after the conclusion of leaders’ summit in Brisbane, Australia, on Sunday. The summit was held against the backdrop of a modest and uneven global economic recovery.
At a press conference in Pretoria on Tuesday, Minister Nene said leaders noted that the world economy is not growing fast enough due to the lack of global demand and supply constraints.
“They agreed that while there might be scope in some countries to still use macroeconomic policies to stimulate and support the economy, a bigger boost to growth will have to come from country-specific structural reforms,” he told the media.
On the question of how South Africa and other countries that are feeling the economic downscale will navigate to meet the target, Minister Nene stressed that country-specific reforms will also be needed to meet the 2018 target.
Minister Nene said although SA has no fiscal flexibility for at least two years, it would contribute to baseline growth in the third year at least.
He said it would not be appropriate for SA to stay out of global commitments, adding that the leaders have committed to monitor and hold each other to account for reaching the target.
South Africa has projected the economy to grow by 1.4% this year, which is a downward revision from 2.7%.
But with the structural changes occurring in major economic sectors, South Africa is expected to boost its economic growth and the economy will grow gradually by 3% in 2017.
Minister Nene said the world leaders had many fruitful discussions during the course of the summit.
The ninth meeting of its kind since 2008, the summit according to Minister Nene was centred on boosting growth and creating jobs, building a stronger, more resilient global economy as well as strengthening global institutions.
The G20 also tackled the issue of tax evasion by multinationals, energy, climate change, Ebola, terrorism and calls for the reformation of international financial institutions, particularly the International Monetary Fund (IMF).
Global Infrastructure Initiative
Leaders endorsed the Global Infrastructure Initiative, a multi-year work program to spur quality public and private infrastructure investment.
"We have agreed on a set of voluntary leading practices to promote and prioritise quality investment, particularly in infrastructure," reads the communique.
To support the implementation of the initiative, the G20 leaders pledged to establish a Global Infrastructure Hub with a four-year mandate, contributing to developing a knowledge-sharing platform and network between governments, development banks and other international organisations.
Trade and infrastructure investment
The leaders reaffirmed their agreement to facilitate trade by lowering costs, streamlining customs procedures, reducing regulatory burdens and strengthening trade-enabling services through reforms and promote competition, entrepreneurship and innovation and resist protectionism.
Minister Nene welcomed the commitments made with regards to boosting infrastructure, saying it will go a long way in helping the African continent’s infrastructure funding gap estimated to be around US$93 billion per annum.
“We are therefore happy that issues of accelerated infrastructure investment through designing appropriate funding instruments, carefully structured public private sector partnerships (PPPs), and project development facilities received a lot of attention at the summit,” said Minister Nene, who together with International Relations Minister Maite Nkoana-Mashabane, accompanied President Jacob Zuma to the summit.
He said that the G20 initiative on infrastructure will complement a number of other initiatives which South Africa is involved in, including the Infrastructure Consortium for Africa (ICA) which was launched at the G8 summit in Gleneagles in 2005.
Ebola
With South Africa being the only African country that participates in the G20 summits, he said the delegation had utilised its attendance to raise issues of particular concern to Africa and the South.
One such issue, he said, was the impact of the Ebola outbreak in West Africa and how it could affect the economic growth of Africa.
"We are indeed concerned, it is for that reason that we actually led the inclusion of matters that relate to Ebola at the G20 level," he said, adding that the pandemic is not only an economic matter, but also a humanitarian matter.
The summit also reached a consensus in reducing the gap in participation rates between men and women in G20 countries by 25 percent by 2025, in reducing youth unemployment and in addressing informality.
The policymakers also pledged to take strong practical measures to reduce the global average cost of transferring remittances to 5 percent and to enhance financial inclusion as a priority.
Minister Nene welcomed these commitments, saying they complement the South African government’s measures and interventions that are being undertaken to jump-start the economy, while addressing poverty, inequality and unemployment through the implementation of a National Development Plan. - SAnews.gov.za
