Gigaba goes into overdrive
The latest credit rating downgrade by Moody’s and announcement of an official recession have triggered a long list of interventions to be spearheaded by Finance Minister Malusi Gigaba.
So serious is the state of the country’s economy that Gigaba even cancelled a trip to Germany. An emergency meeting with the economic cluster ministers was called by President Jacob Zuma on Wednesday evening and numerous meetings with economic stakeholders such as Business Unity SA, the Black Business Council, the Black Management Forum, the Association of Black Securities and Investment Professionals, as well as the Black Investment Managers Business Forum were held.
The latest downgrade comes after Moody’s initially put the country on a three-month review before deciding on the downgrade.
Gigaba, during a media conference in Pretoria on Thursday, announced that government had embarked on a number of interventions aimed at stimulating inclusive growth.
“At all of these interactions we have engaged frankly on the state of the economy, how to get it back on track, and what short and long-term measures must be taken to advance our national development, Gigaba said of the meetings already held.
“All three rating agencies have raised similar issues – the slow pace of growth-enhancing reforms; growing contingent liabilities amid poor governance at key stateowned companies; and political risks, among other issues.
“Our sovereign credit rating has a huge macroeconomic impact and affects government, business and ordinary South Africans alike.
“We are committed to restoring it to a favourable investment grade rating with a positive outlook as quickly as possible,” Gigaba said.
Gigaba said he cancelled his trip to a G20 Africa Partnership Conference in Germany earlier in the week because he “felt it is critical to ensure that we respond appropriately to the disappointing economic performance of the first quarter”.
He further pointed out that government had been deeply concerned about the recession and was considering an appropriate response, a matter which was discussed in the recent Cabinet meeting.
Gigaba said government has, however, made some progress, but this would only be visible at a later stage. It was still committed to maintaining the fiscal framework announced in the budget and the medium-term strategic framework.
“We have heard the call from business and investors that providing policy certainty and stabilising and revitalising state-owned companies are among the most important short-term steps we can take to restore confidence.
“Finally, inclusive growth and economic transformation are the top priorities of government, and are mutually reinforcing.
“We must, and will, advance both of these,” Gigaba said, adding that there was notable progress as, though there was contraction over the last two quarters, the economy expanded by 0.6% on a year-on-year comparison between the first quarter of 2016 and the first quarter of this year.
“We can still work hard to ensure that this is held up for the rest of the year.”