Finance Minister Pravin Gordhan
Photo by: Duane Daws
Finance Minister Pravin Gordhan, following his return from an investor roadshow to the UK and the US, indicated that South Africa had been given “breathing space” until June to implement “concrete” actions that demonstrated its ability to both manage its fiscal constraints and improve its growth prospects.
While emphasising again that it was possible for the country to avoid being downgraded to junk, he stressed that both ratings agencies and investors increasingly wanted proof that South Africa was taking action to address the risks facing the economy. “We need to provide very concrete evidence over the next few months that we are not just talking, that we are not just delivering new plans and new proposals. It’s time for collective action, concrete action and demonstrable action, which the world can say: ‘yes, we believe you guys’.”
The roadshow delegation, comprising representatives from government, business and labour, met with more than 250 investors and asset managers in London, Boston and New York – individuals who collectively represent some R600-billion of South Africa’s R2-trillion debt stock. The investors were particularly concerned about South Africa’s flagging growth performance and wanted clarity on how the country planned to rekindle an economic expansion.
However, the credibility earned by the National Treasury over decades meant that both ratings agencies and investors had shown a preparedness to provide South Africa with some time to demonstrate that it was able to put growth “on the agenda again”, while also managing its fiscal risks and dealing with legislative, regulatory and policy uncertainties.
Besides the perennial issue of labour-market instability, the lack of certainty over amendments to the Mineral and Petroleum Resources Development Act was raised as a particular area of concern, as was the poor performance of a number of State-owned companies and the burden this could impose on the fiscus.
Many questions had also been raised about whether the political climate was truly supportive of the interventions being pursued under the stewardship of Gordhan, who was hastily reappointed Finance Minister in December after markets and society had reacted with extreme negativity to the so-called ‘9/12’ meltdown.
Gordhan indicated that his focus, in partnership with organised business and labour, was on taking “more and more strides in the right direction to ensure that all of the resources we command individually are brought to bear in the national interest”.
Government and business were already working jointly on a series of actions to support both vulnerable sectors such as mining, agriculture and construction, as well as to bolster small businesses and sectors seen as performing below potential, such as tourism and export-orientated manufacturing. The intention was to incorporate labour into these initiatives, most of which would deliver action plans to the President within the coming three months.
Work was also advancing to ensure secret balloting ahead of strikes, while a process was under way at the National Economic Development and Labour Council to ensure that legal strikes were both peaceful and shorter in duration, possibly by using arbitration awards.
Gordhan said that, working together, there was a real possibility to “pull our socks up . . . unite all the good people in this country who want to contribute to growth and employment and development and overcome the historic problems we have”.