JOHANNESBURG – South African Finance Minister Pravin Gordhan said on Friday that the domestic and global growth outlooks remained bleak and sounded a warning about the financial health of state-owned companies, which include power utility Eskom
“As a country we are operating in a global environment that is not going to see growth of 4, 5 or 6 percent for a long time to come,” Gordhan told a job creation summit in Johannesburg.
Africa’s most advanced economy narrowly avoided downgrades to subinvestment status in a round of reviews by the three major ratings agencies in the first half of the year, but is teetering on the brink of recession.
The economy contracted 1.2 percent in the first quarter as mining shrank and a severe drought took its toll on agriculture.
Gordhan said the country needed to boost investor confidence by reducing uncertainty in economic policy and improving governance at state-owned firms.
“State-owned entities have guarantees to the tune of just over half a trillion rand ($35.3 billion) with the state,” Gordhan said.
“The key concern that ratings agencies and others would have is that as a result of levels of mismanagement, those guarantees shouldn’t be called out at any stage.”
($1 = 14.1600 rand)