- Finance Minister Enoch Godongwana told investors that he is committed to maintaining the fiscal framework.
- The newly appointed minister flagged the public wage bill, pressure from state-owned enterprises and debt service costs as risks to the fiscus.
- Among his priorities include restraining expenditure and pursuing a "balanced and prudent" fiscal strategy.
Finance Minister Enoch Godongwana told investors that he may have a "different style" to his predecessor, Tito Mboweni, but he is committed to maintaining the current fiscal framework.
The minister and other Treasury officials on Friday engaged in a call with investors, where he briefly discussed his position on several economic matters.
Godongwana was appointed finance minister by President Cyril Ramaphosa last week, taking over from Mboweni, who had resigned.
Dubbed as a "known entity" by the markets, the minister assured investors of his long history in public finance, having joined government via the "Treasury route" - when Trevor Manuel was finance minister. Manuel was finance minister from 1996 to 2009.
"I am not new to Treasury", he said. "My satisfaction is ... that Trevor Manuel built an interesting institution. I suspect I can only fail if I ... destabilise this institution," he said.
Godongwana was previously deputy minister of public enterprises and economic development. He has also served on the ANC's economic subcommittee and in the past nine years has been head of economic policy formation for the governing party.
Treasury Director-General Dondo Mogajane similarly pointed out that he had worked with Godongwana when the latter was MEC of finance for the Eastern Cape. Mogajane said that Godongwana has always been in the "background" of the work done at Treasury.
Change, in that he will have a different style to Mboweni. But there will be continuity in terms of the policy trajectory, he said.
"We come from the same party; we do not have different mandates, and from that perspective there will be continuity in terms of the sustainable fiscal path he has chosen," he said. "As things stand, I do not see any changes in the fiscal framework."
Responding to questions on his priorities for fiscal sustainability, Godongwana said that the country needed to continue with expenditure restraint, which underpins fiscal sustainability. Secondly, government must pursue a "balanced and prudent" fiscal strategy to stabilise public finances.
Godongwana highlighted that there are no additional tax measures for the medium-term expenditure framework. To deal with the risks, government plans to reduce non-interest expenditure to the value of 4% of GDP, primarily from the wage bill. "It will not be an easy task, but we are committed to it." Treasury will also direct expenditure toward capital assets.
Godongwana noted that he was joining Treasury at a time when there is a global economic recovery - which has benefitted commodities domestically. This has been positive in terms of bolstering revenues. The revenue projection is higher than revised estimates.
The new finance minister said that the domestic economic recovery remained on track.
Operation Vulindlela - a joint project between the Presidency and Treasury - aims to support structural reforms. These include energy security - which is partly being addressed by licence exemptions for generating facilities of up to 100 MW; improving efficiencies at ports - especially with the Ports Authority becoming an independent subsidiary of Transnet; as well as the release of spectrum, he explained. "There is work going on with some of these structural reforms."
Following the call with investors, Godongwana and Treasury officials engaged with ratings agencies.