Tight fiscal discipline ahead for South Africa - CNBC Africa

Tight fiscal discipline ahead for South Africa

Southern Africa

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South Africa's minister of finance Pravin Gordhan.

“Firstly, South Africa is still growing above two per cent. Secondly, as of now, government is going to more aggressively implement the National Development Plan.[This] will help us with economic growth but also with infrastructure, investment and many other areas of both our society and the economy that need to be changed,” Gordhan told CNBC Africa.

“Thirdly that as a government, for 19 years, we’ve done very well in managing our fiscus. Although we have the same deficit as we expected, and our debt is slightly up, we believe that we have a sustainable fiscal situation going ahead. As we get better growth, and as the world environment changes as well, we’ll do slightly better as a South African economy and get about three per cent growth and create more jobs.”

Gordhan added that the positive turn expected will also allow for the support of local enterprises, and use their advantage on the local and regional market. A number of South African retailers and business firms have invested within various countries in the continent, including real estate company Broll, Sanlam, Mr Price and Woolworths.

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Gordhan’s tough fiscal discipline was especially indicated on a ministerial level, where a number of cost-cutting measures were announced. These included the end of credit card provisions to members of parliament, and minimal staff allowances during travel.

“Many of these things we’ve done over a four-year period but particularly at a programmatic level. As growth didn’t bounce back to the pre-recession, when we were almost growing at five per cent as an economy, we’ve been rearranging programmes, looking for savings in departments,” Gordhan explained.

“This is an extra bit that we are adding on to say that as government, we need to give a signal to our own society that we’re going to be modest in what we do. Where there are opportunities to cut costs, we should do that.”

Local and international analysts however claim that South Africa’s competitive streak has begun to wane. The country’s all round poor economic performance this year has also added to the negative sentiment. Gordhan is however adamant that South Africa is still a strong economic contender.

“There are many areas where we’re very competitive on the African continent. If you look at the World Economic Forum Competitiveness Index, our stock exchange has got the best governance in the world,” he said.

“Our financial system is in the top five of the world, our budget transparency as government is in the top two in the world. There are many areas we do very well, and there are many areas where we need to do better.”

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