Share

No magic bullet to improve junk status - Gigaba

Cape Town – South Africa’s debt has grown substantially since the financial crisis of 2008 as a result of low economic growth and rising demands on government finances, according to Finance Minister Malusi Gigaba.

Delivering his maiden budget speech in Parliament on Tuesday, Gigaba acknowledged that ratings agencies’ credit opinion is “critical” as they rate public debt which has an impact on South Africa’s ability to borrow and refinance debt.

“Their independent assessment of our creditworthiness and economic prospects is influential with investors,” Gigaba said.

South Africa’s sovereign credit rating was recently downgraded to sub-investment grade by Standard & Poor's and Fitch.

“We continue to engage intensively with all the rating agencies to take them into our confidence on ongoing reforms, growth initiatives, and our commitment to measured fiscal consolidation and improving the governance and sustainability of our state-owned companies,” Gigaba said.

“We hope these engagements will avert further downgrades in the short term, and that progress in these areas will improve our credit ratings in the medium term.”

He acknowledged though that there is no “magic bullet” to improve South Africa’s junk rating. “We must implement the National Development Plan and the nine-point plan.”

Budget shortfall lower than expected

Gigaba said the budget deficit for the previous financial year (2016/17) is marginally lower than the estimated 3.9% of GDP presented to Parliament in February; it is now estimated at 3.8% of GDP.

“Over the next three years the deficit will be reduced to 3.3%, stabilising debt as a percentage of GDP and confirming the resilience of our public finances,” Gigaba said.

In the period ahead, government will focus on strengthening budget execution and the in-year monitoring of spending, he said.

Read Fin24's top stories trending on Twitter:

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
18.94
-0.2%
Rand - Pound
23.91
-0.1%
Rand - Euro
20.43
+0.2%
Rand - Aus dollar
12.34
+0.1%
Rand - Yen
0.13
-0.2%
Platinum
910.50
+1.5%
Palladium
1,011.50
+1.0%
Gold
2,221.35
+1.2%
Silver
24.87
+0.9%
Brent Crude
86.09
-0.2%
Top 40
68,346
+1.0%
All Share
74,536
+0.8%
Resource 10
57,251
+2.8%
Industrial 25
103,936
+0.6%
Financial 15
16,502
-0.1%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders