Government 'not scared to borrow'

The government will allow its debt to GDP ratio to increase so that it will be able to spend more should the country's needs require it, Deputy Finance Minister Nhlanhla Nene said.

Addressing the Annual Audit Committee Conference in Johannesburg, Nene said the debt to GDP ratio was currently at levels around 35%.

The government would borrow more if conditions in the country called for it, especially social needs and economic growth, he said.

The government would, however, "exercise restraint and caution" in its spending, but would prioritise the improvement of the lives of ordinary people.

Increased spending was planned in the next few years on social plans such as the National Health Insurance scheme that is currently under debate.

According to Nene, the low rate of saving in the country remained a challenge, despite the various available savings instruments.

"South Africa suffers from low savings. It's a very difficult culture to instil," he said.

Although South Africa's financial sector had been relatively unscathed by the 2008 financial and economic crisis, there was "no room for complacency".

The crisis had presented an opportunity to see how best to enhance the country's financial architecture, Nene said.

The national Treasury had released a document titled "A safer financial sector to serve South Africa better" which suggested a shift to a twin-peak model to financial regulation.

One would look at prudential regulation, while the other focused on market conduct.

Nene urged audit committees and directors to be more vigilant about the running of companies.

The government often faced "resistance" from some financial- sector participants when it instituted regulations, Nene said.