South Africa Treasury Working to Fix Country’s Economic ‘Mess’By
New Director General also focused on improving credit ratings
Labor market must be reformed; 27.7% unemployment unacceptabe
South Africa’s new National Treasury Director General, Dondo Mogajane, said the institution is focused on carrying out reforms that will get the economy out of a recession and improve its credit ratings.
“We are in a mess -- the mess is a low growth trap, but it’s possible to get out of it,” Mogajane said at a conference in Johannesburg on Saturday, his first public comments since his appointment on June 8. The economy needs to encourage more competition, generate jobs and keep the cost of living low while focusing on fast and inclusive growth, he said.
Mogajane, an 18-year Treasury veteran, was promoted to replace Lungisa Fuzile, who resigned following the removal of former Finance Minister Pravin Gordhan in a cabinet reshuffle at the end of March. Both Fitch Ratings Ltd. and S&P Global Ratings cut the country’s foreign-currency credit ratings to junk after the shake up, while the South African economy went into a recession in the first quarter and unemployment hit a 14-year high at 27.7 percent.
“There’s no difference in our work since Gordhan left,” Mogajane said. There are 1,200 people in National Treasury who want to do all they can to get South African out of the recession and improve its ratings, he added.
“If our economy doesn’t grow and continues on the downward spiral, we will one day be forced to say we go to the International Monetary Fund or the World Bank with cap in hand,” Mogajane said. “We need to tackle legislative uncertainty. The current management in National Treasury stands ready to change ownership patterns in our economy.”