THE government will maintain policy continuity and remains committed to fast-tracking economic reform aimed at lifting economic growth, the Treasury’s director-general, Lungisa Fuzile, says.
The three major ratings agencies have voiced concern at what they say are likely to be negative effects from the outcome of last week’s local government polls.
Fitch Ratings on Friday said there was a risk that the ANC could resort to “more populist” policies to appease voters, after failing to secure more than 50% of the votes in the Johannesburg, Tshwane, Ekurhuleni and Nelson Mandela Bay metros.
Moody’s said that while increased political competition had the potential to boost reform momentum in the run-up to the 2019 national elections, it was concerned about the likelihood of a rise in spending pressures.
S&P Global Ratings said it expected the introspection caused by the ANC’s poor election performance to prompt it to rethink the economic policy path already agreed to, raising the risk that reform momentum could slow.
“Noting some of the comments by ratings agencies on the outcome of the local government elections, the National Treasury reaffirms government’s fiscal policy stance as articulated in the 2016 budget,” Fuzile said in a statement on Monday.
Fuzile said the government remained committed to implementing fiscal consolidation and returning public finances to a sustainable path while protecting core social and economic programmes.
Collaboration with business, labour and civil society to restore and maintain confidence in the economy would continue, the Treasury said.
The Treasury was also committed to strengthening municipal finances through budget reform and technical support initiatives. This includes working with cities to accelerate investment in urban development through the city support programme, Fuzile said.