South Africa’s new finance minister, Pravin Gordhan, said on Wednesday that the country’s government must keep a tight rein on spending.
Gordhan also reiterated that there would be policy continuation in Africa’s largest economy, which may already be in the midst of its first economic recession in 17 years.
Trade unions and communist party leaders, who helped President Jacob Zuma’s rise to the top, want more government spending on the poor, which makes foreign investors nervous.
”The reality is that we have limited fiscal space … We have got to keep a tight hand on the spending side. There is no recklessness, if you like, that you can expect from the South African government,” Gordhan said in an interview with CNN.
”We have been prudent for many years and we intend to continue to be so,” he added.
Gordhan, previously head of the tax authority, was sworn in as finance minister on Monday. His long-serving predecessor, Trevor Manuel, moved to a new powerful planning commission that will set overall direction for the economy.
Asked whether he hoped to see South Africa’s budget back in equilibrium or possibly in surplus, Gordhan said: ”Hopefully in the next two to three years, but again that is dependent upon where the world economy is going. We are all umbilically tied if you like, in that fashion.”
The Treasury said in its 2009 Budget Review it would float an international bond to raise the equivalent of $1-billion. This would help finance a budget deficit forecast at 3,8% of gross domestic product in the 2009-10 fiscal year. — Reuters