JOHANNESBURG – The budget objectives are not only set by him but by government as a whole, during an extensive process involving various officials, Finance Minister Pravin Gordhan has said.
His comments come amid concerns that he may not have the political support to achieve his budget objectives and stay in his job. In an earlier statement, the Presidency dismissed rumours that Gordhan’s position could be in jeopardy “with the contempt it deserves” and said the difficulty in the relationship between the Minister of Finance and the Sars Commissioner, Tom Moyane, was “being dealt with through the correct channels”.
Despite slowing growth and fears that South Africa’s sovereign credit rating could be downgraded to junk, Gordhan announced during his Budget Speech last week that the budget deficit would decline from 3.2% of GDP in the current year to 2.4% by 2018/19.
“The agenda is clear, what we need to do is clear. There are some new imperatives that we face arising from the current context, like the ratings issue, but more importantly generating confidence in our economy.”
Gordhan said senior people in government and National Treasury have been involved in that process.
“We will continue with that, because that process of engaging different sectors of our society is proving to be very, very fruitful.”
Addressing business delegates at a Deloitte post-budget briefing on Thursday, Gordhan said good fiscal numbers wouldn’t address the issue of a potential downgrade any longer.
He said there was a time when ratings agencies would use a matrix to determine if countries were fiscally sound.
“In the last six years the goalposts have shifted.”
While fiscal stability is still important, ratings agencies also raise questions about indebtedness, a country’s growth prospects and the political economy.
“Today you have got to take four or five of these factors and look at them together and say ‘do we as South Africa present the right picture to the world?’ and everyone of us has to take responsibility for that,” Gordhan said.
Gordhan said the first project government has agreed upon is to work with the private sector to address the ratings question.
It will embark on a joint roadshow with some people from the private sector imminently in the UK and in the US, to meet ratings agencies and other investors.
It is also investigating a special fund to support small businesses and entrepreneurs. Two leading business people and other parties are looking at the design of that fund and more information should be available in the next two weeks, he said.
Government is also looking at areas of co-investment and investment from the private sector.
Gordhan said government has also received a number of other offers. Some private sector parties have volunteered to make a number of people available to perform the duty of non-executive directors at State-owned companies and to make skills available to government departments on a pro-bono basis.
With regard to sector-specific opportunities like agriculture, the minister said the impact of the drought on food prices is another area where government and business has to put their heads together to not only understand the impact in the months to come but to collaboratively draft a plan to manage inflation and food prices to make sure food security is assured to those South Africans worst hit by the drought.