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S. Africa remains committed to measured fiscal consolidation: president

Xinhua, April 4, 2017 Adjust font size:

The South African government remains committed to a measured fiscal consolidation that stabilizes the rise in public debt, President Jacob Zuma said on Tuesday.

It is more important than ever now that South Africans unite as a country and work together in light of the unrelenting socioeconomic challenges that they face, Zuma said at the launch of the Trans-Africa Locomotive project in Koedoespoort, Gauteng Province.

Zuma was speaking one day after international rating agency Standard & Poor (S&P) lowered the long-term foreign currency sovereign credit rating on South Africa to 'BB+' from 'BBB-' and the long-term local currency rating to 'BBB-' from 'BBB'.

It was the first time in 17 years that South Africa's sovereign credit was downgraded to junk status.

S&P said it made the decision in light with the cabinet reshuffle effected by President Jacob Zuma last week.

The reshuffle, which saw Finance Minister Pravin Gordhan being sacked, put South Africa's fiscal and growth outcomes at risk, the agency said.

"The downgrade reflects our view that the divisions in the ANC-led government that have led to changes in the executive leadership, including the finance minister, have put policy continuity at risk," S&P said.

Zuma defended the cabinet reshuffle, saying the reshuffle will add renewed energy into cabinet and the executive as a whole.

While the political leadership has changed, the government's overall policy orientation remains the same as derived from the governing party, the African National Congress, said Zuma.

A smooth transition in the finance portfolio has taken place, which shows the maturity of leadership within the governing party, Zuma said.

"A united and stable National Treasury and finance portfolio as a whole is absolutely critical for government and the country," he said.

Zuma said he has directed newly-appointed Minister of Finace Malusi Gigaba and Deputy Finance Minister Sifiso Buthelezi to immediately prioritize unity, peace, cohesion and stability within the finance portfolio.

This will enable all components of the portfolio to focus on the tasks at hand, said Zuma.

He pledged to continue to work with business and labour to take forward the work of the CEO Initiative which was established last year to reignite growth, while also strengthening the Presidential Business Working Group where the Presidency interacts with all components of business.

Gigaba and his team will also be reaching out to the international investor community urgently to assure them that South Africa remains a stable, reliable and competitive investment destination, according to Zuma. Endit