20101213
reuters

JOHANNESBURG (Reuters) - South Africa's economic development Minister Ebrahim Patel's plan to weaken the rand by cutting interest rates is unlikely to gain support in government and would not increase the country's competitiveness.

His proposals on the rand are at odds with the policy articulated by both the central bank and the Finance Ministry and raise old questions over who exactly is driving policy.

Patel released his "new growth path" last month, a set of policy measures aimed at quickening South Africa's economic growth to create jobs for millions that continue to live in poverty, even 16 years after the end of apartheid.

"I do not think it's a good idea," said Tony Twine, economist at Econometrix. "Weakening the rand is an inflationary tactic which simply camouflages the inability of the economy to work efficiently."

The rand has gained nearly 30 percent against the dollar

and the euro since the start of last year, helping to push inflation to 5-year lows and keep it within the Reserve Bank's 3 to 6 percent target.

But exports have been depressed, especially those destined to South Africa' largest trading partner, the eurozone as that region's growth has been sluggish.

Partly due to rand gains, the manufacturing sector has shrunk and shed hundreds of thousands of jobs, pushing unemployment to an official figure of 25.3 percent of the working force. The unofficial rate may be as high as 40 percent.