Treasury to meet rating agencies to discuss economy and credit rating
Minister of Finance Malusi Gigaba told reporters ahead of his medium-term budget policy statement (MTBPS) that Treasury would meet ratings agencies after his speech to Parliament as well as in the coming weeks‚ to discuss the economy and SA’s credit rating.
Gigaba said his speech looked to portray a “candid” picture of the state of affairs in the South African economy.
Rating agencies have downgraded the country’s credit ratings in the past year.
SA recently crawled out of a technical recession but the growth forecast for this year has been slashed‚ by Treasury‚ the Reserve Bank and other institutions including the IMF.
Gigaba told reporters earlier on Wednesday that the fiscal framework was at risk of a R3.9bn breach‚ and the impact of this would be “severe”.
Asked whether he was concerned about further rating downgrades‚ Gigaba said the rating agencies had been communicating closely with Treasury on the state of the economy and this would continue in the lead-up to the February budget speech.
“We will have a conference with the rating agencies after the budget has been delivered and more engagements in the comings weeks.
“Without speculating too much‚ we will be candid with them about the economic situation of the country‚” said Gigaba.
He said it was critical that all government decision-makers appreciate the fact that SA was in a slow-growth trap‚ which would only worsen if the policy framework did not begin looking beyond fiscal consolidation.
“We are in tough economic times and we have had to make tough choices to maintain the fiscal framework.
“More work is needed ahead of the February budget to reduce the budget deficit as well as government debt‚” said Gigaba.
He said South African Airways and the South African Post Office needed to be stabilised‚ and guarantees could no longer be loosely relied upon; strict conditions had to be imposed on the state-owned companies that take them up.
Gigaba said Treasury would meet with the new SAA board to discuss stabilisation measures and a possible strategic equity partner for the national carrier.
With regards to public wage increases undermining the gains made by freezing new appointments‚ Gigaba said the government would strive for a wage agreement that was affordable and fair.
When asked about the disposal of assets to get funding‚ particularly Telkom‚ the minister said this was an ongoing process where assets would be listed and duly considered.
Asked about the absence of nuclear power plans from his speech‚ Gigaba said nuclear remained in the energy mix‚ but that procurement of a large-scale nuclear power project remained unaffordable.
He said a new integrated resource plan on energy would provide more clarity.