“We cannot spend money we do not have. We cannot borrow beyond our ability to repay,” South Africa’s Finance Minister Pravin Gordhan told parliament. “Until we can ignite growth and generate more revenue, we have to be tough on ourselves.”
With growing fears of credit downgrades from ratings agencies after a year of continuing economic troubles in the African nation, anticipation ran high ahead of Gordhans annual budget speech in parliament on Wednesday.
Once he was face to face with legislators, Gordhan revealed the specifics of the budget plan which include a total spending reduction over three years of 25 billion rand .
Gordhan said this years growth rates would hover around 0.9 percent, compared to initial predictions 1.7 percent.
While many had expected budget cuts, following the speech the value of South Africas currency dipped 2.5 percent.
South African financial experts were not optimistic that the stark budget cuts would inhibit rating agencies from imposing downgrades.
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