SA economy tops agenda at Budget Council Lekgotla

Tuesday, November 28, 2017

Finance Minister Malusi Gigaba on Monday convened a Budget Council Lekgotla, where South Africa’s economic developments were discussed at length.

“Some of the issues discussed at the meeting include the economic context of the 2018 Medium Term Expenditure Framework (MTEF); an update on the changes to the economic context; the impact of sovereign credit rating downgrades so far; the status of ratings (downgrades) and implications thereof for spending, as well as revenue collection in the immediate future,” said the Ministry of Finance in a statement.

The main objective of the meeting was for government counterparts to learn from one another on best practices and processes that need to be in place to ensure a coordinated approach towards the inclusive economic growth agenda.

The meeting was held on the understanding that the proper functioning of an efficient intergovernmental system, that promotes cooperation and coordination, remains the single most effective way to maximise service delivery within the available financial resources.

“This cooperation and coordination is particularly important in a constrained fiscal environment where there is slower growth in allocations. In spite of the existence of many intergovernmental forums, coordination of policy, planning and implementation remains a government-wide challenge,” said Minister Gigaba.

Minister Gigaba said despite the slowing growth in allocations, the responsibility of radical and inclusive growth remains the responsibility of all.

“Provinces play an important role in delivering on the agenda of economic development. Everything we do impacts, directly or indirectly, on economic development. Many sectors involved in the delivery of services can, in an environment of slowing allocations, make better use of existing resources to obtain better functioning with similar results through improved coordination, collaboration and oversight,” he said.

Minister Gigaba welcomed President Jacob Zuma’s directive to trim down expenses and increase revenue in order to find a solution to the R40 billion gap identified in the Medium Term Budget Policy Statement (MTBPS).

“With regards to a media statement issued by President Zuma, Minister Gigaba notes and welcomes the statement and commits to working together with the Presidential Fiscal Committee and social partners to fulfil the duties outlined by the President in order to take South Africa forward,” said the Ministry.

The Presidency on Monday released a statement on the measures being taken to address economic challenges after Standard & Poor’s lowered South Africa’s long term foreign and local currency debt ratings by one notch each to ‘BB’ and ‘BB+’ on Friday.

On the other hand, Moody’s gave South Africa some reprieve by maintaining the country’s credit rating above junk at Baa3. The ratings agency placed South Africa’s long-term foreign and local currency debt ratings of ‘Baa3’ on a 90-day review for a downgrade. –