Johannesburg - South Africa is likely to miss its 1.3 percent growth target
this year and may have to curb spending to stick to its budget framework,
Finance Minister Malusi Gigaba said.
“We do believe there are a number of hard decisions that
will have to be made,” Gigaba told reporters in Pretoria, the capital, on Thursday. “We will
look at where we can get money and where we need to reprioritize so that we can
meet our fiscal targets.”
Gigaba has faced an uphill battle to revive growth and
restore investor confidence in Africa’s
most-industrialized economy since being appointed to his post on March 31. He
replaced the widely respected Pravin Gordhan, who had clashed with President
Jacob Zuma over a nuclear expansion plan and the management of state companies.
S&P Global Ratings and Fitch Ratings. cut their
foreign-currency assessments of South
Africa to junk in April, with Moody’s
Investors Service reducing it to the lowest investment grade this month as the
economy slipped into recession for the first time since 2009.
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Gigaba has previously committed to fiscal discipline in an
attempt to meet the budget-deficit target of 3.1 percent of gross domestic
product in the year through March. Fitch estimates a gap of 3.3 percent, saying
budget cuts it anticipates the National. Treasury will make later this year won’t be sufficient to
offset a tax shortfall.
The government is committed to addressing the concerns
raised by the ratings companies, has heeded calls for greater policy certainty
and sees faster and more inclusive growth as its top priority, Gigaba said.
"If we don’t react to this situation, the economy will get
into deeper trouble,” he said. “We are all frustrated by the lack of growth
which, if sustained, will compromise our ability to rapidly reduce
unemployment, poverty and inequality.”