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Johannesburg - Government must be a force for growth and
progress and despite not engaging in austerity measures, fiscal discipline must
be maintained, said Minister of Finance Pravin Gordhan.
"We will not give in to unreasonable expenditure
requests from the SA government," he told the ANC's Progressive Business
Forum on Thursday evening.
"We will keep the debt to GDP (gross domestic product)
ratio at 40% to 41%," he said.
This came a day after a major rating agency cautioned that
SA's sovereign rating could come under threat if its fiscal deficit worsened,
while rising debt levels were being monitored closely. Another agency last week
changed its outlook for the country to negative.
"We must take on the challenge of changing the
composition of expenditure," said Gordhan. While noting that salaries took
up a high proportion of spending, he said: "We need to find more for
investment on infrastructure."
Gordhan wanted to see a greater level of financial discipline
being inculcated. "We need to be a lot more careful in how we spend the
limited resources we have so it benefits the economy."
Gordhan said models that created jobs and not just good GDP numbers were needed. "The search is on."
He called for more dynamic entrepreneurs to take advantage
of the opportunities that are available and for more competition.
"The world is in transition and this is important as to
how businesses reposition themselves. We can't disconnect ourselves from this
crisis due to the interconnected world.
"No one can tell you what will happen in a week's
time," Gordhan said of the current volatile market conditions.
But inequality gaps are growing and more attention needs to
be given to this developing inequality.
"We need to understand the transmission mechanisms of
the crisis to SA." These include a drop in Asian trade, lower commodity
prices and volatile currencies.
Gordhan said it was the global crisis and risk aversion that
had led to the volatility and weakness in SA markets this week when the rand
struck its worst level all year rather than the secrecy bill being passed, as
some media had reported.
"We still have a lot of hard work to build a capable state," he said.
