Nene vows to cut deficit, grow economy

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Nhlanhla Nene, who replaced Pravin Gordhan as finance minister, has pledged to follow his predecessor in bringing down the budget deficit and spurring the economy.

The National Treasury had a clear, three-year fiscal framework in place, Nene, 55, said in an interview in Pretoria on Monday.

In the five years that Nene was deputy finance minister, the government committed to bringing the budget deficit down to below 3 percent of gross domestic product (GDP) by curbing spending and boosting economic growth. Economic policy in President Jacob Zuma’s final term is focused on the 20-year National Development Plan (NDP) that seeks to cut the jobless rate to 14 percent by 2020 from 25 percent currently.

“Investors know, they have seen all our documents, they’ve seen our medium-term policy framework, they’ve also seen our NDP, which is our blueprint,” Nene said. “We’ve set a clear fiscal framework, so fiscal discipline is on the cards. What we want to do is grow the economy. When it grows, we will be able to spend more.”

The rand fell for a second day, dropping 0.4 percent against the dollar to R10.4030 at 10.37am in Johannesburg.

Nene holds a marketing diploma, a Bachelor of Commerce honours degree in economics and a certificate in macro- and micro-economics from the University of London. He became a municipal councillor for the ruling ANC in 1996 and held the post until 1999, when he became an MP.

He served as co-chairman of Parliament’s joint budget committee and chairman of its finance committee before being appointed deputy finance minister in 2008.

“Nene is an experienced and highly competent technocrat,” Mark Rosenberg, the Africa director at Eurasia Group in New York, said.

“Nonetheless, we view Nene’s broadly political appointment as slightly negative for fiscal policy” since he did not have the clout within the ANC to push back against pressure from other cabinet ministers to increase spending, Rosenberg said.

The economy has come under strain this year as a four-month strike over pay at the biggest platinum mines has curbed output. Statistics SA published first-quarter GDP data yesterday that showed the economy contracted for the first time since a 2009 recession.

The government was concerned by the impact of the strike, which was not in the interest of workers or the industry, Nene said. “It is in the interest of everyone that it gets resolved.”

Gordhan, 65, was moved to head the Department of Co-operative Governance and Traditional Affairs, which oversees the municipalities.

He would be well-placed to address underdevelopment in rural areas, which was a key priority for the government in the next five years, Nene said. “We want to see local government that is working. The deployment of the former minister of finance in that department will work in the positive for us.” – Bloomberg


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