S. Africa's new finance minister pledges to continue sound fiscal management

South Africa's newly-appointed Finance Minister Pravin Gordhan pledged on Monday to stay the course of sound fiscal management.

"We will unreservedly continue our fiscal consolidation process and we will stabilize our debt in the medium term. If needs be, we will accelerate this by either cutting spending or making selective changes to tax policy," Gordhan said in Pretoria hours after he was appointed by President Jacob Zuma as finance minister.

"Similarly, any revenue raising opportunity will be considered very carefully to ensure that it does not damage growth or affect the poor negatively," said Gordhan.

He said the government's expenditure ceiling is sacrosanct, and the government can have extra expenditure only if it raises extra revenue.

Gordhan was finance minister in the previous government for five years between 2009 and 2014.

His re-appointment as finance minister came as the market was experiencing turmoil sparked by the sacking of Nhlanhla Nene.

Zuma fired Nene on December 8 and replaced him with David van Rooyen, a little known MP. The move caused jitters at the market, sending the rand plummeting to record lows of R16 to the U.S. dollar, the stock market dropping by 2.94 percent and bond yields shooting up by over 150 basis points.

"Our government is acutely aware of the financial impact this had on those who are invested in this economy. As President Zuma indicated when a decision triggers developments such as these, a democratic government has a duty to listen and respond appropriately," Gordhan said.

He appealed to the nation to work with the government as it continues to build a resilient economy and a better life for all South Africans in the context of a challenging global, emerging markets and domestic economic environment.

Gordhan pledged that the government will not cut pro-poor programs, growth inducing programs and investment.

"Instead we will seek to increase investment in the 2017 Budget. We are going to redouble our efforts to ensure efficiency of expenditure across the public service. New measures are being put in place to contribute to reducing corruption and enhancing transparency and these will be complemented by stern enforcement," he said.

Gordhan said one of the risks to the fiscal framework is the financial state of state-owned companies.

He emphasized that any support to these companies will be done in a fiscally sustainable manner.

While many are in a strong financial position, the performance of others has weakened, Gordhan noted.

Work has therefore begun to develop a uniform legislative framework to regulate state-owned companies, he said.

"We cannot avoid the necessity of wide-ranging reforms that will put them on a sustainable financial footing and where good governance is non-negotiable," said Gordhan.

He also pledged to work with the Reserve Bank, saying the government is going to intensify and accelerate the pace of financial sector reforms.

"A stable financial sector is central to oiling the real sector of the economy. As a caring government we fully appreciate our duty to protect all those invested in our economy.

"We will always act to protect the pensions invested in our bonds, equities and other forms of stocks," Gordhan said.

One of the strengths of South Africa is a strong and modern private sector in whose hands rests around 80 percent of the economy, he said.

"We are going to intensify our cooperation and partnerships with the private sector to improve investment so that we can achieve higher rates of growth," Gordhan said. Enditem