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SA not heading for catastrophe - Gordhan

The Finance Minister says South Africa has recovered from tougher economic times.

Minister of Finance Pravin Gordhan delivered his 2012 Medium Term Budget Policy Statement (MTBPS) at the National Assembly in Parliament, Cape Town. 25/10/2012. Picture: GCIS.

CAPE TOWN - Finance Minister Pravin Gordhan said South Africa was fiscally safe and not heading for a catastrophe.

He delivered the Medium Term Budget Policy Statement in parliament on Thursday.

The statement looks at government spending over the current financial year and allocates funding for the next three years.

The document was drawn up in a tough economic climate, including a spate of wildcat strikes and the downgrading of the country's sovereign debt rating.

Gordhan said South Africa had shown great resilience in the face of problems including strikes in the mining sector.

It is estimated the economy has lost over R10 billion because of the industrial action.

Gordhan said there are solutions and these begin with government.

"We are committed to taking strong measures to ensure value for money and eliminating waste. We've survived worse than this in getting to where we are today."

He spoke of government departments re-prioritising funding to save R40 billion over three years.

This money will then be invested in more successful state programs.

Meanwhile, opposition parties gave mixed reaction to the Medium Term Budget Policy Statement .

Freedom Front Plus Leader Pieter Mulder said he was disappointed.

"If you compare the numbers that the minister predicted in February to recent numbers, we're in trouble. What he predicted didn't happen. The deficit is up, the growth rate is down; surely that is a crisis. All the indicators are moving in the wrong direction."

However, the African Christian Democratic Party's Steve Swart said Gordhan did the best he could considering the difficult circumstances, while the Democratic Alliance's Tim Harris said the minister had very little space in which to make budget adjustments.

"The finance minister was under pressure to show investors that he has got control of the fiscus, that he is prepared to undertake fiscal consolidation and I think the constant spending freeze that he announced sends that signal."

Gordhan expects economic growth of 2,5 percent this year, down from just over 3 percent in 2011.

He also announced a 'spending freeze'.

"There will be no additions to the overall spending levels; public expenditure will remain at the levels set in the 2012 budget."

Economist Dawie Roodt said the minister showed he is taking control of the tiller.

"At least the message he is sending out to the rest of the world is that the way that we manage our government finances and the competency of his department is certainly comparable with the best in the world."

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