Brendan Boyle

Brendan Boyle

The Treasury is prepared to borrow and spend to defend South Africa's economy during the current global economic downturn, Kuben Naidoo, head of the budget office, said yesterday.

In a bold commitment to follow the lead of governments that have come to the rescue of battered domestic economies, he said the Treasury would support the investment programmes of state-owned companies and intervene to prevent a sudden unwinding of the country's dangerously high current account deficit.

"We have already indicated that we're ready for much higher budget deficits," he said at a conference hosted by the Bureau for Economic Research in Stellenbosch. He declined to indicate a ceiling, but said investors had to be able to believe that any deficit spike was temporary.

He said foreign investors whose inflows have funded the current account deficit so far had to remain convinced that the South African economy would continue to grow. - With Sapa