NEWS
25/01/2018 06:37 SAST | Updated 25/01/2018 06:38 SAST

Gigaba's Budget: 'SA Will Feel Some Pain'

Malusi Gigaba says South Africa is taking tough decisions to reduce its debt.

Finance Minister Malusi Gigaba speaks to members of the media after delivering his medium-term budget speech in Parliament, in Cape Town, South Africa, October 25, 2017.
Sumaya Hisham / Reuters
Finance Minister Malusi Gigaba speaks to members of the media after delivering his medium-term budget speech in Parliament, in Cape Town, South Africa, October 25, 2017.

The budget presented by Finance Minister Malusi Gigaba in February will include some "tough decisions" taken to stabilise South Africa's debt, and South Africans will have to "bear some pain" as a result, Reuters reported.

Gigaba was speaking on the sidelines of the World Economic Forum in Davos on Wednesday.

He reportedly said the budget would include some interventions to boost the economy as part of a "difficult fiscal framework".

"What I will be doing at the budget will be going to announce the tough decisions to stabilise the debt but reduce the budget deficit. We have to announce tough decisions and South Africans will have to bear some pain [as a result] of some of the decisions we are going to have to announce in order to stabilise our debt," he reportedly said.

Gigaba joined the high level South African delegation to Davos, led by Deputy President Cyril Ramaphosa this week.

According to Fin24, the team's presence has given a much-needed confidence boost to the country. The delegation reportedly said that its visit was part of a broader effort to restore confidence in the economy.

Gigaba is expected to give direction on major financial challenges in February, including how government will fund President Jacob Zuma's announcement that higher education will be free for poor and working-class students.

According to Business Day, the budget before borrowing is projected to rise to 4.3 percent from the 3.1 percent target set in last year's February budget. Spending is expected to be R3.9-billion higher than expected, while revenue is expected to fall by R50-billion. Growth has been revised down from 1.3 percent to 0.7 percent.

In his medium-term policy statement in October last year, Gigaba reportedly painted a bleak picture of South Africa's economy.

"It is not in the public interest‚ nor is it in the interest of government‚ to sugar-coat the state of our economy and the challenges we are facing. It is only when we understand these challenges fully and candidly that we will know what to do ... as well as what trade-offs must be made in the public interest‚" he said.

But that policy statement was criticised for providing little detail on how government planned to deal with the country's financial difficulties.

It is expected that Gigaba will elaborate on plans to curb corruption and wasteful expenditure at state-owned enterprises -- something he did not do in October.

According to the Mail & Guardian, he said at the time: "As the shareholder, we are tired of being dragged into crises by those we employ to govern and manage state-owned companies. This must end. The trend of [parastatals] seeking bailouts to finance operational expenditure, inefficiency and waste must also be brought to an end."