South African Finance Minister insists economy is not in crisis

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The South African government’s fiscal policy is “sustainable”, according to Finance Minister Pravin Gordhan’s medium term budget policy statement.

The treasury have reduced spending in response to the forecast that the country’s debts will rise over the medium-term, and will be adhering to the budget ceiling set in February.
Gordhan said that South Africa’s economy was “not in terminal crisis.”

South Africa was recently downgraded by credit rating agencies Standard & Poor’s and Moody’s who raised concerns about the impact social unrest, such as the ongoing miners’ strikes, on ANC economic policy.

The Minister said: “There are too many people outside of this country making judgment calls.” He added that external observers did not understand South Africa’s “political culture and make negative pronouncements way out of line with the realities of political developments.”

As expected, the country’s economic growth forecasts were revised downward from 2.7% predicted in February’s budget to 2.5%. The statement also committed the government to examining spending on public sector wages, and reiterated his desire for the government to invest in infrastructure. Gordhan said: “In difficult times it is important not to carry on with business as usual.”

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