On 26 October, 2004, Finance Minister Trevor Manuel delivered government’s medium term budget policy statement.

Minister Manuel reported a remarkable recovery from the 2003 slowdown and pointed to positive factors such as an increase in employment, growing investment across a wide range of sectors, the strong recovery of manufacturing and a housing boom.

The increased investment in the public sector will include education, health, roads, housing and water and electricity services. Also, an expanded public works programme will create jobs.

Key features of government’s vision of the South African economy for the next three years include the increase of social and infrastructural expenditure and the lifting of exchange controls on companies and investors.

Government expects that moderate inflation, low interest rates, a broadly stable and competitive currency and a range of small business support mechanisms will up public and private investment from a current 16% of GDP to 25% by 2014.

Exchange control limits on new outward foreign direct investments by South African corporates is proposed, although application for exchange control to the Reserve Bank will remain a requirement. It is also proposed that South African corporates will be allowed to retain foreign dividends offshore and that foreign dividends repatriated to South Africa after October 26, 2004 may be transferred offshore at any time for any purpose.

It was announced in February 2004 that foreign companies, governments and institutions would be able to list on South Africa’s bond and securities exchanges so as to encourage foreign investment into South African and to promote South Africa as a financial center for Africa. To support this, government will now also eliminate all restrictions on investment by South Africans in these companies.