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Gigaba worries about shock market reaction on mines charter

Cape Town – Finance Minister Malusi Gigaba expressed concern over the market reaction to the release of a new Mining Charter earlier on Tuesday.

“The new mining charter is a welcome step, but we note it already has consequences - mining stock has dropped and there are a number of reactions out there,” Gigaba said.

“We hope Minister (Mosebenzi) Zwane will engage with the sector – the Chamber of Mines and unions – as a matter of urgency to address concerns and to be able to continue to pursue transformation goals,” Gigaba said.

READ: Markets bloodbath as Zwane shocks mining sector

Addressing the media on the steps government intends on taking to counter the recession South Africa finds itself in, Gigaba said mining was one of the two sectors that contributed positively to the economy rebounding to 12.8% quarter-on-quarter. “This was driven by higher production of gold and other metal ores, including platinum.”

The agricultural sector also recovered after a long period of drought and grew by 2.2% quarter-on-quarter.

“If all the sectors of the economy showed this kind of growth, we wouldn’t have had this discussion today,” Gigaba said.

READ: Gigaba: Economic transformation to push forward, despite bleak economy

Public sector wage bill

Gigaba said government will have to perform a tight balancing act ahead of the medium-term budget policy statement (MTBPS) that will be delivered in October this year.

Of particular concern is that the public sector wage bill may put extra pressure on the fiscus, given that the current three-year agreement will come to an end next year.

“The MTBPS will be watched carefully as we’ll have to allocate resources in a tight environment. Hard decisions will have to be made and we’ll have to look at the possibility of further cuts (in expenditure),” Gigaba said.

“We’ll also have to find a way to keep the public wage bill within limits and reprioritise spending for certain programmes.”

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