‘We have never broken a fiscal promise’

IOL pic pravin gordhan header INDEPENDENT MEDIA SA Finance Minister Pravin Gordhan. File picture: Leon Lestrade

Johannesburg - South African Finance Minister Pravin Gordhan sought to reassure investors that the government is serious about meeting its fiscal promises and staving off further credit-rating downgrades amid the slowest economic growth since a recession in 2009.

“We have a good story to tell, but clearly we need to prove to ourselves and to them that we’re capable of working together to grow the economy, create jobs and make our fiscal framework a viable one,” Gordhan said in an interview on Talk Radio 702 on Wednesday. The minister gave a series of radio interviews about meetings he is having with investors and rating companies in the UK and the US.

Read: Moody's warns of ratings cut

Investors are seeking more stability in economics and politics in South Africa, and signs that growth will recover, he said. Moody’s Investors Service will visit the nation next week to assess the government’s plans after placing the country on review for a downgrade, Gordhan said. Moody’s rates South Africa at two levels above junk and one level above Fitch Ratings and Standard & Poor’s.

Africa’s most-industrialised economy is at risk of falling into non-investment grade status as the economy slows, knocked by the worst drought in a century and weaker demand from its biggest trading partner, China. Confidence also hasn’t recovered since President Jacob Zuma decided in December to install little-known lawmaker David van Rooyen as finance minister, causing the rand and bonds to plunge. Four days later, Zuma appointed Gordhan to the position he had held from 2009 to 2014 after officials in his party and business leaders intervened.

Fiscal promises

Gordhan told Moody’s that “we have never broken a fiscal promise that we’ve made in our 20 years as a democracy”, he said on Johannesburg-based PowerFM radio from Boston. “They want to understand where growth in this economy is going to come from, and we’ve given them examples of what we are working on.”

Read: Rand shivers after notice from Moody's

The rand weakened 0.2 percent to 15.4657 per dollar at 9am in Johannesburg on Wednesday.

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