WORLD BANK URGES SOUTH AFRICA TO USE TAX INCENTIVES TO PROMOTE GROWTH

The World Bank says the South African government should use its tax incentives more effectively to attract private investment and grow the economy, which it projects will expand only 1.1 per cent in 2017.

It has warned that the growth rate is too slow to alleviate poverty and curb inequality and notes that although South Africa is desperate to create jobs at a faster rate, the county’s declining growth rate is making that difficult to achieve.

The World Bank says the answer may lie in providing investor tax incentives in the right places.

It says the government’s current set of incentives are not attracting the desired private investment levels and need to be re-orientated to sectors which will show results.

The Bank’s latest South Africa Economic Update shows agriculture, manufacturing and construction as having good potential to lift the local economy.

World Bank Senior Economist Mark Hanusch has warned that the South African economy will face more tough times ahead if things do not improve. There is still a risk of a downgrade, rating agencies evaluate solvencies of government and it means they must service their debt obligations and for that you need revenue or cut expenditure.

The World Bank expects the South African economy to grow at 1.1 per cent in 2017, more optimistic than the International Monetary Fund (IMF) projection of only 0.8 per cent.

It says while the dissipating drought, stronger commodity prices and smoother labour relations may help, the country’s growth rate falls short of creating jobs and alleviating poverty as envisaged in the government’s National Development Plan

Source: NAM NEWS NETWORK