Gigaba: Economy contraction a setback for govt

Gigaba was replying to debate in the National Assembly on the Appropriation Bill, which provides for the allocation of national revenue to government departments.

FILE: Finance Minister Malusi Gigaba. Picture: Christa Eybers/EWN.

CAPE TOWN - Finance Minister Malusi Gigaba says the contraction in the economy, which has plunged the country into its second recession in less than 10 years, is a setback.

He's told Parliament that if growth doesn't improve, government's spending plans could be affected.

Gigaba was replying to debate in the National Assembly on the Appropriation Bill, which provides for the allocation of national revenue to government departments.

A number of opposition parties are refusing to support the bill, citing allegations of state capture.

The minister says the government is now under pressure to intensify its growth programme and to restore confidence in South Africa’s economy “as a matter of urgency”.

“The current growth rate if sustained will lead to further decline in further GDP per capita and revenue, threatening the affordability of our planned expenditure.”

Gigaba says South Africans cannot afford to become despondent but must focus on efforts to get the economy out of its low-growth path.

He says concrete timelines will be announced soon for finalising policy processes aimed at giving the certainty that the markets and ratings agencies are calling for.

(Edited by Zinhle Nkosi)