‘We dare not relax’– Gungubele
Despite the improved sentiment, South Africa cannot afford to relax in its quest to return public finances to a sustainable path‚ Deputy Finance Minister Mondli Gungubele said yesterday.
“Despite an improvement in the outlook and a reprieve from credit ratings agency Moody’s at the end of March‚ we dare not relax and allow the things that [took us] to the precipice to prevail,” he said at a public financial management conference in Johannesburg.
Gungubele said growth prospects had been revised in the right direction and there had been positive reaction from investors‚ but the most vulnerable in society remained exposed when governance structures were weak.
“President Cyril Ramaphosa has ushered in a new dawn and asked all of us as citizens to embark on a path to restoring our country‚” he said.
South Africa had made strides since the mediumterm budget policy statement when the country’s debt rocketed to 60%.
“Confidence was low‚ investment stifled‚ instability was the song of the day and confidence [was] waning day by day.”
The 2018 budget demonstrated a stronger fiscal framework‚ he said.
“When we adopted the budget this year‚ we looked at a fiscal framework that seeks to demonstrate to South Africans and the broader investor community that we have a clear intention to climb a new hill.
"Our fiscal framework was adopted to ensure that our public finances are returned to a sustainable path.”
He said in that context‚ some tax adjustments had to take place‚ particularly around VAT. By 2021‚ the Treasury expected to revise expenditure down to 52% debt to GDP and reduce the budget deficit from 4.1% to 3.5% based on the growth outlook and the fiscal interventions to limit the expenditure ceiling.