Gigaba: SA needs to pay greater attention to growing economy

Finance Minister Malusi Gigaba told business people at an event in Cape Town on Thursday that the rand is a floating exchange rate so there are many reasons why it fluctuates.

Finance Minister Malusi Gigaba delivers his maiden Medium Term Budget Policy Statement on 25 October 2017. Picture: GCIS

CAPE TOWN - Finance Minister Malusi Gigaba says South Africa needs to pay greater attention to growing the economy, rather than the performance of the currency.

The rand plummeted against the dollar as markets digested Gigaba’s medium-term budget policy statement on Wednesday.

It was a bleak picture he painted, with a poor performing economy, a growing budget deficit and a projected dip in tax revenue.

Gigaba told business people at an event in Cape Town on Thursday that the rand is a floating exchange rate so there are many reasons why it fluctuates.

“The markets themselves are shocked. We need to move from focusing the performance of the exchange rates to focusing on what we need to do in order to improve investor confidence.

“Overall, it’s the economy that we need to pay attention to and create jobs.”

Meanwhile, Gigaba said the projected drop in tax revenue is largely due to a poor performing economy in which there are fewer jobs and taxpayers.

Tax revenue is expected to fall short of the initial 2017 Budget estimate by R50 billion, which is the largest downward revision since the 2009 recession.

A drop in tax compliance is partly to blame but Gigaba said that the sluggish economy is the main factor.

“It’s largely because of the poor performance of the economy. If the economy was performing well we wouldn’t be having difficulties and I think to the extent that there are issues of confidence about tax administration.

“There are mechanisms within the tax administration to deal with those who are withholding their taxes.”

(Edited by Leeto M Khoza)