‘We’re in a tight economic situation’
FINANCE Minister Malusi Gigaba is set to meet with sovereign credit rating agencies and investors in Washington DC this week as he tries to quell fears about the country’s political and fiscal uncertainty.
Gigaba and the National Treasury’s director-general, Dondo Mogajane, will be leading a senior delegation to represent South Africa at the 2017 Annual Meetings of the International Monetary Fund (IMF) and World Bank Group taking place until Sunday. The Treasury said that Gigaba, Mogojane, and the South African Reserve Bank Governor Lesetja Kganyago would hold meetings with the investor community and rating agencies.
The agenda of the meetings includes a statutory meeting of the IMF and the development committee of the World Bank Group, meetings on the sidelines with finance ministers and central bank governors of the G20, G24, Brics, and the Commonwealth, and bilateral meetings with ministers of finance from advanced economies, and emerging market and developing countries.
“It is important that we continue to engage these stakeholders to discuss interventions on how they can support South Africa’s development process, and to demonstrate our commitment towards addressing their concerns and restoring comfort and confidence through the 14 confidence boosting measures, over and above the country’s potential to chart an inclusive growth and economic recovery programme,” the Treasury said.
Moody‘s, Fitch and S&P Global Ratings all downgraded the country’s sovereign credit rating, the latter two to sub-investment grade, after President Jacob Zuma fired Pravin Gordhan as finance minister in March.
All three agencies have warned that low growth and state companies that rely on government bailouts pose significant risks to the country’s ratings. They are also concerned about political jostling before a conference of the ANC in December to replace Zuma.
Gigaba’s delegation will also hold meetings on strengthening the constituency office in the World Bank and forging economic partnerships as South Africa shares a constituency office with Angola and Nigeria that is represented by a South African executive director at the board of the bank.
Yesterday, Gigaba said the Treasury would fall short of revenue targets it set in February and that it would have to reduce spending and plug the shortfall. “We are in a really tight economic situation,” Gigaba said. – Additional reporting by Reuters
Minister of Finance Malusi Gigaba. Bailouts pose significant risks to the country’s ratings.