CAPETWON: South Africa’s budget has involved making tough decisions to stabilize the country’s debt and the country will feel some pain as a result, its finance minister said on Wednesday. Finance Minister Malusi Gigaba said the upcoming budget, to be unveiled in the spring, would involve interventions in order to boost confidence and grow the economy, as part of what he described as “a difficult fiscal framework”.
What I will be doing at the budget will be going to announce the tough decisions to stabilize the debt but reduce the budget deficit,” he said, speaking on the sidelines of the World Economic Forum in Davos. We have to announce tough decisions and South Africans will have to bear some pain (as a result) of some of the decisions we are going to have to announce in order to stabilize our debt,” he said. He did not give details of the proposals. President Jacob Zuma’s reign has been beset by allegations of influence-peddling in government and mismanagement of state-owned enterprises which have dented consumer and business confidence. Zuma has denied allegations that he has allowed his friends to influence the appointment of ministers. A Moody’s rating review could see South Africa’s rating cut to junk and the country’s bonds ejected from a key index. That could in turn cause capital to flee the country, raising bond yields and pressuring the currency. We are certainly going to avoid it. I‘m very confident,” Gigaba said when asked about the possibility of a downgrade. He said ratings agencies had previously expressed concern over political and policy certainty, as well as the government’s commitment to fighting corruption.