The department has four programmes, which are: administration, economic development, policy development and economic dialogue. The major part of this budget falls under economic policy and co- ordination. The concern with that, hon Minister and Deputy Minister, is that most of the funds are being transferred to agencies, and you know that the problem with agencies is that they have not been effective for some time. We would remember that there was a report that was commissioned by the National Treasury on development finance institutions, DFIs. I hope that that report will not be chucked aside, because the restructuring of DFIs is important, so that they fit into the New Growth Path we envisage.
We also have the state-owned enterprises. It is important that state-owned enterprises are harnessed into the New Growth Path, so that we do not depend on foreign capital to fund our projects. Domestic savings in South Africa are very low. If domestic savings in South Africa remain very low, we will at some stage be compelled to go and borrow funds outside. Key to this economic dialogue programme is that the department intends to have a dialogue with society, labour, and other stakeholders.
We must encourage citizens, even me and you, to save, because when we save there is more money in the country, there is more money for investment and, as such, we depend less on foreign investment.
However, I would like to come to what the hon Lees said, that the International Monetary Fund has said that the 6,3% growth wouldn't be achieved. If you remember, hon Lees, during the financial crisis, the IMF predicted world economic growth, or rather, changes within a month many a time, because they were not sure of their theory. In any model, be it economic or scientific, there is always an error of parallax, which means that the model itself is flawed. So, we should not actually believe what the IMF says - that the growth in the country is going to be as low as they think. But we should actually take cognisance of the fact that with any prediction, with any model, we should leave room for the error of parallax.
Because we are looking at export-dominated economic growth, there are a lot of debates about the exchange rate, and these debates have been going on for many years. We know that as long as there are trade imbalances with other countries, and interest rate differentials between our trading partners are lower, there will be capital inflow into the country. Therefore, we cannot, from time to time, try to combat the strength of the currency, because in that way we would be playing into the hands of the free market and, as such, losing a lot of money trying to fight the exchange rate that has come to be stable. However, what we need is a less volatile rand exchange rate, a rate that is more or less stable. We don't know what the rate of exchange should be, because there are people who say that the rand must be weaker, while others say that it must be stronger. It just depends on which side of the equation you stand, because if you are a manufacturer you would like the rand to be weaker. But if you are an importer, you would like the rand to be stronger. So that debate has been raging for a long time and we need to find the middle ground where we can grow our economy without having this hindrance of the exchange rate and the rand-dollar situation. [Laughter.]
The hon Lees believes that this department was stillborn. I think that, in the first place, if this department was stillborn we would not be debating this budget today. Secondly, there would not be the New Growth Path. Thirdly, he would not have attended the economic summit that he attended last week at the Birchwood Hotel in Johannesburg.
In the two years that this department has been in existence it has managed to deliver the New Growth Path, and has managed, according to strategic objectives, to have at least the first conference on the economy. This conference will now be held on a yearly basis. Therefore, hon Lees, I think you were a bit economical with the truth there.
Hon Sinclair, regarding the Malema issue, you know that in terms of investment, when investors come to the country, they do not specifically look at individuals; they look at the whole setup in the country. Now, the fact that Malema can say whatever he wants to say shows how democratic South Africa is. It is not like the apartheid days when you could not say anything you wanted to say. This gives investors confidence that they can come to South Africa because there is political stability and a proper financial infrastructure. [Interjections.]
What investors look at as well when they draw up a contract is that there are institutions to make sure that the contract can be enforced, and in South Africa we have a proper judicial system that ensures that contracts are enforced. Those are things that investors look at. Regarding the Malema issue actually, on the other hand, they might not be attracted to South Africa because they know that there is political instability.
We had a meeting with the IMF, as finance yesterday, and they expressed their sincere gratitude that South Africa was doing very well as far as its policies were concerned: the macroeconomic policy, the microeconomic policy, and also the fiscal policies were doing quite well. Thank you, Chairperson. [Time expired.] [Applause.]