South African Finance Minister Malusi Gigaba
Cape Town - The budget deficit stood at 3.8 percent of gross domestic product for the 2016/17 fiscal year and would be reduced to 3.3 percent over the next three years, Finance Minister Malusi Gigaba told Parliament on Tuesday during his Budget Vote Address.

The budget deficit was 3.9 percent in February.

There was “no magic bullet to improve South Africa’s credit rating,” he said. But the government was continuing to engage intensively with rating agencies on ongoing reforms, growth initiatives and fiscal sustainability in South Africa.

“The recent downgrades in our credit ratings have left our foreign currency denominated and domestic currency debt rating at sub-investment grade. We hope that our engagements will avert further downgrades and that our credit rating will improve”, Gigaba said.

“We must implement the National Development Plan and the Nine-Point Plan.” The government and the economic cluster must work together to implement structural reforms required to unlock growth, speedily conclude outstanding policy processes and stabilise and revitalise ailing state-owned companies, he said.

Business confidence

The global growth outlook seems to have picked up as seen in stronger commodity price and local weather patterns are improving (excluding the drought situation in the Western Cape) leading to a slight recovery in business confidence, he said.

The opening of the Brics Development Bank would benefit the South African economy in the areas of access to infrastructure finance, industrialisation and beneficiation, regional integration and trade and domestic resource mobilisation as well as “arresting illicit financial flows”, Gigaba said. But South Africa could not expect international investors to invest if we “don’t invest ourselves”.

Gigaba announced that the Development Bank of South Africa would increase project preparation activities at city and regional levels; the Land Bank would spend R3 billion on agricultural development and transformation, and the Public Investment Corporation (PIC) would continue to play a leading role in investing sustainably in South Africa and the rest of Africa.

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Gigaba noted that the PIC, as a shareholder in large companies, could push companies to advance meaningful transformation “as a matter of good corporate strategy”.

Gigaba referred to the “financial family, and its commitment towards financial sustainability, improved efficiency and prioritising essential sectors and services.”

The rand by 5pm was at R13.0593, up 16.5c to the dollar.