Gigaba promises economic turnaround

FINANCE Minister Malusi Gigaba says there’s still enough time to turn the economy around despite the country having slipped into a recession.

Gigaba said government preferred to look at the glass as “half full” following recent devastating downgrades from credit ratings agencies.

The South African gross domestic product contracted by 0.7% between the last quarter of 2016 and the first of 2017 – marking a second quarter of GDP contraction.

And last week Moody’s downgraded South Africa’s long-term sovereign credit outlook to negative territory and further downgraded the ratings of parastatals such as Eskom and well as the five major banks this week.

In an attempt to demonstrate that government was committed to urgently tackling the dwindling economy, Gigaba said he’s cancelled an official trip to Germany to deal with the situation.

He said President Jacob Zuma has also called an urgent meeting on Wednesday night with ministers in the economic cluster to discuss “critical interventions which need to be taken”.

Another meeting has been scheduled in two weeks to hammer out issues and come up with an “action plan that deals with boosting business and consumer confidence”, he said.

Gigaba said there was still time to turn the economy around.

“If we don’t react speedily we can find the economy in even deeper trouble,” he said.

Gigaba admitted that state-owned companies (SoE) were not in a desirable state but this was also being attended to.

He said if Eskom were to address its governance issues “it will fall off the list of major concerns” as it had not used its entire government guarantee yet and was contributing positively to its balance sheet by selling excess energy to neighbouring countries.

He said Treasury would soon move to fill current vacancies in the SAA board while it was also looking at ways to recapitalise the airline.

Addressing concerns around stability in the Treasury, he said “we continue to reiterate that the fiscal framework is the policy of government, we support it, we are bound to it, we will implement it”.

He said the appointment of Dondo Mogajane as the new director-general pointed to stability in the Treasury.

Gigaba said South Africa’s political situation was not unstable, but there was a lot of “political contestation”.

He said that while there had been marches, and court challenges, this was not as unstable as the period in which SA saw massive service delivery protests and major labour unrest.

“Even intra-party political contestations have not spilled out into something uncontrollable,” he said. — TMG