Johannesburg - South Africa must stick to its budgetary promises and be consistent with policies to maintain its investment-grade credit rating, Finance Minister Pravin Gordhan said.
“We have kept to our fiscal commitment -- we said we would continue with fiscal consolidation in a careful and balanced way, we said that we would taper off debt, we have kept to that to a large extent,” Gordhan said in an interview in Cape Town Wednesday.
There is “no evidence” that political developments within the ruling African National Congress will change policy, he said.
There is “no evidence” that political developments within the ruling African National Congress will change policy, he said.
Slow economic growth and political infighting are key factors rating companies have highlighted as risks to their assessments. Gordhan has had to balance efforts to boost the economy against the need to contain rising debt to fund the budget of Africa’s most-industrialised economy.
He pledged to narrow the budget deficit to 2.6 percent of gross domestic product in the year through March 2020, from an estimated 3.4 percent in the current fiscal year. The economy probably expanded at the slowest pace in seven years in 2016.
Speculation that Gordhan is about to be fired has swirled for months, as he clashed with President Jacob Zuma over the management of state companies and the national tax agency. While the minister has led efforts to keep spending in check and fend off a junk credit rating, Zuma wants to embark on “radical economic transformation” to tackle racial inequality and widespread poverty.
Policy matters
“There were finance ministers before me and there will be finance ministers after me,” Gordhan said. “I don’t think the individual matters, it’s the policy that matters. And if we can sustain a sensible fiscal policy, like we have done for the past 20-odd years, I think we will keep everybody happy.
People come and go, but the key is, and even the ratings agencies will tell you that, that it’s about policy consistency and institutional strength.”
People come and go, but the key is, and even the ratings agencies will tell you that, that it’s about policy consistency and institutional strength.”
The rand was little changed at 12.9744 per dollar by midday in Johannesburg on Thursday. Yields on rand-denominated government bonds due December 2026 fell five basis points to 8.70 percent.
Arabile Gumede.
Full story at IOL.
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