Govt 'confident' that it can address recession - Cabinet

Cape Town – Government is confident in its "systematic interventions" to address economic challenges and improve the performance of state-owned enterprises (SOEs).

In a statement released on Thursday, a day after the customary fortnightly meeting of Cabinet ministers, government said it reflected on the issues raised by three ratings agencies - Moody’s, Standard & Poor’s and Fitch - about the slow pace of growth-enhancing reforms, the performance of SOEs and political risks.

The Cabinet statement was released two hours before President Jacob Zuma is expected to answer questions in the National Assembly about government’s plan of action to address the recession and record high unemployment figures.

"Cabinet reiterates that the foundation for a higher growth path and socio-economic development has already been laid," the statement read. "It focuses on improving investor and consumer confidence by fast-tracking the implementation of the structural reforms for economic growth."

Early in June, S&P and Fitch reaffirmed South Africa’s sovereign credit rating as sub-investment grade, while Moody’s subsequently downgraded the country’s long-term foreign and local currency debt ratings by one notch from Baa2 to Baa3, with a negative outlook, but maintained it at investment grade.

READ: SA economy likely to grow just 0.2% this year - economist 

Like S&P and Fitch, Moody’s said it was concerned about low growth, policy and political uncertainty and rising contingent liabilities among other things.

Cabinet reiterated in its statement that the partnership between government, business, labour and civil society is "critical" to boost confidence levels, so that working together we can reclaim and maintain investment-grade ratings.

Finance Minister Malusi Gigaba said at a media briefing last week that despite the recession, National Treasury maintains that the glass is "half full".

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

On June 6, South Africa entered a technical recession after gross domestic product contracted for a second consecutive quarter.

The economy found itself in negative territory when the GDP was recorded at -0.7% in the first quarter of 2017, following on a 0.3% contraction in the last quarter of 2016. 

Gigaba said at the time that Zuma will convene a full-day meeting in the last week of June to address the factors that hinder policy implementation.