Two of the major challenges facing the economy are encouraging greater private sector investment and the need to improve the state’s capacity to monitor, implement and manage projects.

This is according to Finance Minister Nhlanhla Nene who was addressing the American Chamber of Commerce, adding that government is working to address these challenges.

Nene says, “First and foremost, we have to put public finances on a sustainable footing. The 2014 Medium Term Budget Policy Statement outlined a package of measures. First, we have to slow down the growth of government debt because fiscal consolidation can no longer be postponed.”

“Second, we have to improve the quality of government services. Despite the huge increase in government spending over the last ten years, the quality of government services have remained a challenge.

“Thanks to a freeze in non-essential services and wage moderation, combined with tax measures to increase revenue, we will improve the fiscal position by over R50 billion over the next two years, whilst maintaining a focus on investment spending.”

Additionally, any potential support given to State Owned Enterprises (SOEs) will be ‘budget neutral’.

“If required, balance sheet support will come from disposal of non-strategic assets. We will not borrow to bail out SOEs.”

“Our second main thrust is to crowd in private investment. The past five years have seen investment rise to nearly 20 percent of GDP, buoyed by a doubling of public sector spending on infrastructure.

“While public investment has been resilient, private investment has remained subdued since the onset of the global financial crisis beginning 2008.”

“In line with improving domestic labour relations, dispute resolution mechanisms have been galvanised via recent amendments to the Labour Relations Act. Additionally, the recent Indaba on labour relations has begun the work of identifying areas where solutions to long standing problems can be addressed.”