Pace of fiscal consolidation will be accelerated, Minister of Finance Pravin Gordhan said on Wednesday.
“The Treasury currently expects growth in the South African economy to be just 0.9% this year, after 1.3% in 2015. This reflects both depressed global conditions and the impact of the drought,” Gordhan said.
Gordhan was tabling his 2016 budget speech amid a global economic crisis.
Minister said that South Africa’s economic prospects are intertwined with global economic developments, since the 2008 recession crisis is not yet over.
“The pace of economic growth has slowed in many countries, our major exports- platinum, gold, iron ore and coal have seen substantial declines in global demand and in prices,” Gordhan said.
He said that the effects of the global economic developments have had negative effects on the country which has resulted in lower export earnings, lower revenue, declining investment, job losses and business failures.
“Growth rates of below 1 per cent fall short of what we need to create employment and reduce poverty and inequality, the Treasury currently expects growth in South African economy to be just 0.9% this year,after 1.3%, this reflects both depressed global conditions and impact of the drought,” he said.
Minister also emphasised that the country’s economy is not growing fast enough to raise employment or improve average incomes.He also said that regulatory challenges that affect mining investment and employment are being addressed as well as the minimum wage framework.
Gordhan its time to tighten the belt on expenditure has arrived. Gordhan said that a collaborative effort is needed to combat corruption and abuse of tender procedures, he added that he and President Jacob Zuma have met with business leaders to understand their concerns and views regarding the country’s economy.