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S&P reacts to budget speech

Standard and Poor's says the medium-term budget statement has given SA some breathing room.

FILE: Minister of Finance Pravin Gordhan. Picture: GCIS.

JOHANNESBURG - The medium-term budget policy statement has given South Africa some breathing room, ratings agency Standard and Poor's (S&P) said on Wednesday.

Finance Minister Pravin Gordhan delivered his speech in Parliament, Cape Town.

Speaking to Talk Radio 702/567 Cape Talk's Bruce Whitfield this evening, the minister defended his optimistic view of the economy as a whole.

"We can't sit with our hands folded and say this is a fraught environment, there's nothing we can do, and we give up on life. South Africans are fighters, South Africans are competitive."

S&P's Managing Director for Southern Africa Konrad Reuss says the country's rating will remain where it is for now.

"With regards to the negative outlook, I would say it would be premature to believe that this is the time that we would have to sit down and revise the outlook back to stable."

Reuss says there were no negative surprises in Gordhan's speech.

"There were some positive surprises on how things are holding up. That's why the threat of a near-term downgrade is not that prominent at the moment."

SLASH IN GOVT SPENDING

Slashing government's travel bill is just one of a range of measures Gordhan announced today aimed at eliminating wasteful government spending.

Government spends a small fortune ferrying ministers and officials between Pretoria and Cape Town.

Now Gordhan has decided to take a closer look at Parliament's location.

"The leader of government business, Deputy President Kgalema Motlanthe, has been asked to engage with Parliament on measures to reduce costs and the cost implications of the current Pretoria/Cape Town arrangement."

Gordhan also informed Members of Parliament (MPs) that tax money will no longer be used on over-the-top luxury vehicles, expensive hotels, first-class flights, foreign junkets or on extravagant catering.

Government credit cards are to be cancelled and no new ones will be issued.

The new rules on government spending were agreed to by Cabinet on Wednesday morning and will come into effect on 1 December.

"These guidelines and instructions that are emerging will apply to national government, provincial government, local government, government entities and state-owned enterprises," he said.

Gordhan says no alcohol will be bought with public funds, but says exceptions might be made for state banquets.

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