Gigaba optimistic about turning economy around

Finance Minister Malusi Gigaba.
Picture: ROGAN WARD / REUTERS

There was still enough time to turn the economy around despite the country having slipped into a recession, Finance Minister Malusi Gigaba said yesterday.

The government preferred to look at the glass as half full following recent devastating downgrades from credit ratings agencies, he said.

The gross domestic product contracted by 0.7% between the last quarter of last year and the first of this year, marking a second quarter of GDP contraction.

And last week, Moody’s downgraded South Africa’s long-term sovereign credit outlook to negative territory and further downgraded the ratings of parastatals such as Eskom as well as the five major banks this week.

In an attempt to demonstrate that the government was committed to urgently tackling the dwindling economy, he had cancelled an official trip to Germany to deal with the situation, he said.

He said President Jacob Zuma had also called an urgent meeting for next Wednesday night with ministers in the cabinet’s economic cluster to discuss “critical interventions which need to be taken”.

Another meeting had been scheduled in two weeks to hammer out issues and come up with an action plan to deal with boosting business and consumer confidence.

Gigaba said there was still time to turn the economy around.

“If we don’t react speedily we can find the economy in even deeper trouble. At the moment, there is still an opportunity to turn things around,” Gigaba said.

He admitted that state-owned compa- nies were not in a desirable condition, but this was also being attended to.

If Eskom were to address its governance issues, it would fall off the list of major concerns as it had not used its entire government guarantee yet and was contributing positively to its balance sheet by selling excess energy to neighbouring countries, he said.

The Treasury would soon move to fill current vacancies in the SAA board while it was also looking at ways to recapitalise the airline.

On concerns around stability in the Treasury, he said: “We continue to reiterate that the fiscal framework is the policy of government, we support it, we are bound to it, we will implement it.”

He said the appointment of Dondo Mogajane as the new director-general pointed to stability in the Treasury.

He said that South Africa’s political situation was not unstable, but that there was a lot of “political contestation”.

While there had been marches and court challenges, this was not as unstable as the period in which South Africa had seen massive service delivery protests and major labour unrest.

“Even intra-party political contestations have not spilled out into something uncontrollable.

“We are pretty much OK, I think,” he said.

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