Cabinet revised South Africa’s fiscal framework in January after the economic crisis in December, President Jacob Zuma said during a meeting with black professionals in Pretoria on Friday.
“Due to this subdued economic performance, on the 13 January we decided to review and revise the fiscal framework that was published in October last year,” he said.
“We have agreed to adjust expenditure down and we have discussed and agreed the specific measures by means of which this will be achieved.
“The situation is quite serious and requires that we all play our part to remove constraints to growth, while also continuing with the tasks of economic transformation.
“On the government side, cost containment measures are being introduced and all accounting officers and managers will ensure compliance.
“Public funds must be spent on the core business of government, which is to deliver a better life for all our people.”
Zuma said Finance Minister Pravin Gordhan’s budget speech on February 24 will set out more measures Cabinet has taken to boost economic growth, while promoting fiscal consolidation and prudence.
“We shall do all of this without stopping infrastructure projects and without cutting pro-poor social programmes,” he said.
Zuma’s meeting with black professionals comes after his State of the Nation address last week and in response to Thursday's debate on the speech, in which he told parliamentarians that government should leave no stone unturned to prevent a downgrade.
“I assure you we are implementing the NDP (National Development Plan). And I’m happy that this time around we’re coming together as business, government and labour to agree on the things that will take South Africa forward,” Zuma said in his reply to the debate.
“Our position is that since we cannot change the global economic outlook, we can still focus on correcting the domestic circumstances that have affected confidence in our economy.”
Zuma is meeting key stakeholders as government attempts to forge partnerships to take the country forward, following the economic crisis that occurred at the end of 2015.
Markets and bonds crashed along with the rand in December when Zuma replaced his respected finance minister Nhlanhla Nene with unknown politician Des van Rooyen, who he then dumped for Gordhan due to internal party pressure.
Gordhan has led efforts since then to stabilise the economy and convince rating agencies that South Africa’s fiscal policy is solid to avoid an investment downgrade to junk status, which would have a devastating impact on the economy.