South African Minister of Finance Pravin Gordhan said that even though markets were experiencing a slight upturn, the country had not quite worked itself out of the economic crisis.

Speaking at the Centre for Education in Economic and Finance's yearly meeting, in Johannesburg, he said that if the economic upturn was not handled correctly, another drop might well be experienced before a recovery.

Gordhan pointed out that the world was experiencing a severe recession as a result of "cheap credit", but added that markets might not be able to recover from it because of a lack of credit.

"As part of government's contribution to cope with the recession, it will retain its spending limits and borrow money - up to a limit.

"At the same time, we will ensure that the money that is spent, will be spent wisely, and prioritised properly. Government will also link its spending to the priorities that this particular administration has set for itself," said Gordhan.

He noted that government has to learn from the rest of the world that the crisis would end at some point in time, and that the borrowing that government engaged in would have to be paid back. "Just the interest incurred in itself imposes a huge burden on society."

However, Gordhan noted that South African banks should be applauded for not following the trends of the US - and other international banks. "In South Africa, we have been lucky enough to have proper regulation of our financial institutions."

He said that the big question in coming months would be how the world was orchestrating an exit strategy from this global recession and the stimulus packages injected into a number of economies.

Gordhan said that the South African government would have to watch that other governments around the world did not become too protectionist, as well as ensuring that its own debt did not go too high. "In future, we should also watch out for higher inflation and interest rates."

"What has arisen from this crisis, is that after years of government bashing, the general consensus now is that government is the guarantee of last resort," said Gordhan.

He explained that the fact that taxpayers paid their taxes provided government with the necessary funds to spend and borrow money, enabling it to be the guarantee of last resort.

"If the government was not able to print money or physically intervene in this crisis, it may have been a catastrophe. That is the distinguishing feature when comparing this crisis to the 1929 crisis and the depression that occurred.

"We need to understand the relationship between government, the private sector, and civil society; and how we can reconfigure these relationships going forward. A constructive dialogue needs to be conducted and roles redefined post this crisis," commented Gordhan.