TOP TABLE: (From left)  ANC deputy secretary Jesse Duarte, general secretary Gwede Mantashe, chairperson Baleka Mbete, President Jacob Zuma, deputy president Cyril Ramaphosa and treasurer Zweli Mkhize attend the ANC's Lekgotla at ST George Hotel in Pretoria on Monday. Picture: FREDDY MAVUNDA
TOP TABLE: (From left) ANC deputy secretary Jesse Duarte, general secretary Gwede Mantashe, chairperson Baleka Mbete, President Jacob Zuma, deputy president Cyril Ramaphosa and treasurer Zweli Mkhize attend the ANC's Lekgotla at ST George Hotel in Pretoria on Monday. Picture: FREDDY MAVUNDA

THE African National Congress (ANC) is expected to get a blunt reminder of the dire state of the economy at its three-day lekgotla that started at Irene outside Pretoria on Monday.

The gathering of senior leaders and Cabinet members charts the party’s and the government’s programme for the year.

It is also expected to inform President Jacob Zuma’s State of the Nation address and to some extent, Finance Minister Pravin Gordhan’s budget.

Secretary-general of the ANC Gwede Mantashe said yesterday the Treasury would make a presentation on the economy and Trade and Industry Minister Rob Davies would deliver a report on the international economy.

But, it is unclear whether Mr Gordhan’s presentation will be taken to heart.

At the last lekgotla in July last year, then finance minister Nhlanhla Nene, who was later fired, outlined the numerous risks to SA’s economy and warned that slower global and domestic growth was not temporary, but the "new normal".

He also cautioned that SA was unlikely to meet the target of 5% growth by 2020 set in the National Development Plan.

Mr Nene had flagged the risks from the US and China’s growth rate slowdown and said the large current account deficit made SA vulnerable.

That presentation was given shortly after the state had agreed to a 7% wage increase plus benefits for its employees. Mr Nene had warned that the deal would mean there would not be enough resources for new projects and initiatives.

This year, the outlook is even gloomier.

The rand has not recovered from the depths to which it sank last month after Mr Zuma replaced Mr Nene with little-known MP Desmond van Rooyen. The rand hit R16/$ then and has not yet been able to move back to higher than R15/$.

Since the beginning of the year, it has been pummelled further due to a rout in global markets largely fuelled by fears over the Chinese economy, SA’s single largest trading partner.

A slump in commodity prices, lacklustre economic growth and rising US interest rates have hammered the currency, which dropped 25% last year.

SA was at risk of a ratings downgrade to junk or subinvestment grade if it made another policy misstep such as the firing of Mr Nene, rating agency Standard & Poor’s warned last week.

Low growth, higher inflation and the effects of a persistent drought will make this year one of the toughest for the economy.

Mr Mantashe said all developing economies were walking a tightrope and SA was no exception. The international situation was a factor in the weakening economy as China and the European Union, SA’s largest trading partners, faced difficulties.

The ANC leadership and government officials would debate the reports presented by Mr Gordhan and emerge with the party’s priorities for the year.

The meeting would also receive a report on local government and another on education.

Councillor selection is set to be hotly contested ahead of local government elections, with disagreements already surfacing in Gauteng and the Eastern Cape as ANC factions fight for spots on the party’s lists.

But, Mr Mantashe said contests this year were less intense than in the past and that the ANC had a clear policy on candidate selection.

ANC ally, the Congress of South African Trade Unions (Cosatu) is attending the meeting and, with the support of the South African Communist Party, will raise its opposition to the Taxation Laws Amendment Act taking effect from March 1.

Mr Mantashe said the disagreements over the law were centred on the preservation of provident funds. Without the amendments, many workers would be given a "life sentence of poverty" because they would spend their retirement funds and "retreat back to poverty".

He poured cold water on Cosatu’s threat to withhold support for the ANC in the coming elections because it was unhappy that the law had been passed.

Mr Mantashe said the federation had resolved at its last national congress — its highest decision-making body — that it would support the ANC.

"Only a congress can change that decision," he said.