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Zuma instructs Gigaba to identify measures to urgently address SA economy

In a statement, the president says he, together with Cabinet, have re-affirmed government’s commitment to maintain a sustainable fiscal framework.

FILE: Finance Minister Malusi Gigaba at a briefing. Picture: AFP

JOHANNESBURG - President Jacob Zuma has directed Finance Minister Malusi Gigaba to identify concrete measures to urgently address challenges identified in the Medium-Term Budget Policy Statement.

In a statement, the president says he, together with Cabinet, have re-affirmed government’s commitment to maintain a sustainable fiscal framework.

This comes after ratings agency Standard & Poor’s Global dropped its rating for South Africa’s local currency to junk status at the weekend, joining agency Fitch with both its local and foreign currency ratings below sub investment grade.

Meanwhile, government has been given a clear warning by ratings agencies and economists: there needs to be fiscal change.

Moody’s has placed the country on review, but kept its ratings at one notch above junk.

The Finance Ministry has responded to the ratings decisions by saying that next year’s February budget will outline decisive and specific policy measures to strengthen the fiscal framework.

However, Mike Schussler of economist.co.za disagrees.

“The problem with that is we’ve always been told we have plans. The problem is on the implementation side.”

Cosatu’s Sizwe Pamla said government has offered little financial direction.

“We are worried. Treasury could have done much more.”

Despite this, the ministry says it has noted the concerns by the ratings agencies and will present a plan to boost growth and improve business confidence.

But Business Leadership South Africa (BLSA) says there needs to be an urgent commitment to the broader economic crisis to avoid more downgrades.

COO Busi Mavuso said more needs to be done to stabilise the economy.

“There needs to be good governance around SOEs (state-owned enterprises). We shouldn’t be surprised that we've been downgraded, because we failed to address all the things we were requested to address by ratings agencies.”

Economist Hugo Pienaar said it’s critical that the February budget by the Finance Minister, Malusi Gigaba, shows a firm commitment to consolidating the budget over time.

“If we can do that, we may prevent a Moody’s downgrade, but this will take quite a bit of hard work for us to prevent that.”

Meanwhile, Democratic Alliance leader Mmusi Maimane says parties and organisations need to work together to constitute a new government which will upgrade South Africa to an investor friendly country.

“We’ve got great business people and we’ve got great public servants. I think we bring all those people together, we can fight this battle of ensuring that we turn the tide of South Africa’s investment grade.”

OWN GOALS

In a statement, BLSA CEO Bonang Mohale put blame on the government, saying the current administration seems to derive joy at scoring own goals.

He says many economic and political problems South Africans experience are rooted in corruption, state capture and political patronage resulting in a trust deficit.

Mohale said the two Cabinet reshuffles, mixed messages around nuclear capability, poor numbers, a lack of direction in the medium-term budget policy statement and most recently the resignation of Michael Sachs at National Treasury, have all sent a message of instability to ratings agencies.

(Edited by Leeto M Khoza)

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