CAPE TOWN, April 13 (ANA) – Policy certainty, fiscal sustainability, inclusive growth and leadership stability remain the top priorities of Treasury, Finance Minister Malusi Gigaba told South African asset managers and investors on Thursday.
Addressing them in Cape Town, Gigaba said Treasury felt it important to address their concerns ahead of next week’s International Monetary Fund (IMP) Spring Meetings in Washington DC.
Gigaba acknowledged the recent downgrading of South Africa’s sovereign rating to junk status by S&P Global and Fitch, were a setback, but said he and his team would work as hard as possible to restore the country’s investment-grade rating.
“We are fully aware of the negative impact ratings downgrades can have on government’s ability to borrow affordably, and on the private sector’s ability to attract foreign investment. We are also cognisant of the impact on society and the everyday livelihoods of South Africans,” he said.
“We are here today as realists, clear-eyed about the challenges, but at the same time we are optimists, positive and upbeat about South Africa’s competitive advantages – current and potential – and our economic prospects.”
The minsiter noted that business confidence in the first quarter of this year had improved, the inflation outlook was beginning to improve and the the current account deficit had “narrowed sharply”.
Turning to leadership stability, Gigaba said he intended to confirm a replacement for director-general Lungisa Fuzile as soon as was possible to ensure continuity at the Treasury. Fuzile indicated to Gigaba’s predecessor Pravin Gordhan, before he was axed, that he would leave the Treasury before his contract ended in 2018.
“Without prejudicing the prescribed process which must unfold, Treasury has a proud tradition of capable leaders emerging from within, so I’m sure several of the talented and experienced managers here will apply and be considered.”
The minister said inclusive growth needed to be fasttracked by providing policy certainty, specifically on energy, mineral and petroleum resources, broadband, and land reform.
Gigaba would also continue the work of cutting red tape to ensure doing business in South Africa was made easier, work closer with the private sector and social partners on “practical initiatives” to promote inclusive growth, and improving “governance and financial sustainability of state owned companies”.
For the economy to grow, Treasury would protect fiscal sustainability, and would aim to stabilise government debt to 50 percent of GDP (gross domestic product).
“To accomplish this, we are tightly controlling expenditure, with budget deficits narrowing from 3.4% of GDP last year, to 3.1% in 2017/18, and narrowing to 2.6% in 2019/20,” said Gigaba.
“Any spending pressures will need to be accommodated within the current baseline, without breaching the expenditure ceiling.”
– African News Agency (ANA)
