South African Finance Minister Pravin Gordhan made the following comments at a press conference in Cape Town today, ahead of delivering his mid-term budget to Parliament:
“The past four-and-a-half years have been a period when we have demonstrated a great deal of correct political leadership.
‘‘We have helped growth to the extent we could have within the scope of our current fiscal envelope. Over a period of time we have curtailed real government spending.’’
The government has balanced ‘‘the requirements of supporting government consumption and supporting growth projects in the economy while at the same time our project of medium term fiscal consolidation is prosecuted in a responsible way.
‘‘We have had some slippage in the past two years or so.
‘‘Those slippages are not the result, as some would like to believe, of excessive spending or as some ratings agencies say, populist pressure but rather events that have objectively taken place in the economy, which have resulted in lower revenue.
‘‘We recognize the deficit will certainly improve as we move into the next three years.
‘‘We feel quite confident South Africa’s growth prospects will improve.
‘‘On the question of the ratings agencies, some of them like to show that they are very influential in shaping what we have to say.
‘‘I believe that our approach has been very transparent and very clear that once the recession came to our shores, as I have always put it, we have the fiscal space in 2009/10 to borrow, to defend expenditure.
‘‘Counter-cyclicality is a very important part of what we have to do. Any cuts in the wrong place will actually damage economic growth. We have got to keep this balance going between the elements of counter-cyclicality and support for the economy and ensuring at the same time that we enhance the consolidation process.
‘‘Regrettably one of the things that we hear from some of the rating agencies is not about the numbers, it’s about sentiment.
‘‘In our view we are running a sustainable fiscal ship and hopefully the ratings agencies will do their homework and recognize that in a very turbulent environment and one in which we have got huge historical legacies to overcome, we actually are keeping a fairly good 19-year record at good fiscal management in South Africa.’’
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