S.Africa: Gordhan bemoans response to Eskom

Finance Minister Pravin Gordhan said yesterday he was “disappointed” by the response of developed countries to Eskom’s plan to seek about 4bn in loans from the World Bank to build power plants.

“It’s the first loan SA is asking the World Bank for, and suddenly there’s all sorts of doubts,” Gordhan said in an interview with Bloomberg TV.

There are “moral voices being raised about why the World Bank should not be financing coal-fired power stations”.

Eskom is struggling to fund a R460bn five-year expansion plan, and has discussed terms of a 3,75bn loan for the construction of the Medupi coal-fired plant.

An extra 250m was requested from the World Bank’s Clean Technology Fund.

“We hope they understand that developing countries need a period of time during which they will still use coal, but make a commitment, like SA is making, to the renewable side of the energy spectrum,” Gordhan said.

Gordhan, with President Jacob Zuma on a three-day state visit to the UK, said the government had to restructure the economy, developing industries such as mineral processing and agriculture, to slash unemployment.

“We recognise that the current growth path won’t give us the jobs that we require,” Gordhan said.

SA’s expected economic growth of 3% a year over the next three years was not fast enough to meet a government pledge to cut the jobless rate to 14% by 2014 from 24,3%.

“We are looking at ways to increase that 3%” to 5%. Gordhan forecast 2,3% growth this year.

The rand’s 27% rally against the dollar since the beginning of last year undermined the competitiveness of exports, threatening the economy’s recovery.

Gordhan said a “key objective” of the government was to reduce the rand’s volatility, and the Treasury would give the central bank “fiscal support” to boost its foreign currency reserves.

SA did not plan to impose restrictions on short-term foreign investment, such as Brazil’s tax on investment in stocks and bonds introduced in October, the minister said.

The government’s new plan would focus on minerals processing and agriculture to boost jobs and growth, Gordhan said.

He reiterated that the government did not plan to nationalise mines, and said investors’ assets were safe.

Bloomberg

Source: www.businessday.co.za 20100305

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