The new finance minister Pravin Gordhan held his first press conference since his re-appointment on Monday. (He previously held the portfolio for five years between 2009 and 2014).
Gordhan says he was approached “over this weekend” about the post and first consulted with his family before accepting the job.
At the briefing, Gordhan read out a statement in which he said familiar with economy’s terrain and its challenges.
“The facts about the developments that took place last week and the response of the financial markets are well-known. Our currency fell, the stock market dropped by 2.94 per cent and bond yields shot up by over 150 basis points.”
The government was aware of the financial impact these developments had had “on those who are invested in this economy.”
“As President Zuma indicated when a decision triggers developments such as these, a democratic government has a duty to listen and respond appropriately.”
Gordhan asked for the nation to work with him as “we continue to build a resilient economy and a better life for all South Africans in the context of a challenging global, emerging markets and domestic economic environment.”
The focus in the coming months will be to do the following:
– Stay the course of sound fiscal management. “Our expenditure ceiling is sacrosanct. We can have extra expenditure only if we raise extra revenue. We will unreservedly continue our fiscal consolidation process and we will stabilise our debt in the medium term. If needs be, we will accelerate this by either cutting spending or making selective changes to tax policy. Similarly, any revenue raising opportunity will be considered very carefully to ensure that it does not damage growth or affect the poor negatively.”
– Not not cut pro-poor programmes, growth inducing programmes and investment. “Instead we will seek to increase investment in the 2017 Budget.”
– Redouble efforts to ensure efficiency of expenditure across the public service. “New measures are being put in place to contribute to reducing corruption and enhancing transparency and these will be complemented by stern enforcement.
– Be clear that one of the risks to the fiscal framework is the financial state of State-Owned Companies. “Let me emphasize that any support to these companies will be done in a fiscally sustainable manner. As President Zuma said no state-owned entity will dictate to government how it should be assisted and nothing will be done that runs contrary to the fiscal prudence that our country is renowned for. While many are in a strong financial position, the performance of others has weakened. Work has therefore, begun to develop a uniform legislative framework to regulate state-owned companies.”
– Remain committed to strengthening the link between policy formulation, budgeting, and performance.
– Work with the Reserve Bank. “We are going to intensify and accelerate the pace of financial sector reforms, which will be underpinned by the Financial Sector Regulation Bill. A stable financial sector is central to oiling the real sector of the economy. As a caring government we fully appreciate our duty to protect all those invested in our economy. We will always act to protect the pensions invested in our bonds, equities and other forms of stocks.”