PRETORIA, South African President Jacob Zuma has directed Finance Minister Malusi Gigaba to trim down expenses and increase revenue in order to find a solution to a 40-billion-Rand (about 2.9 billion) gap identified in the Minister’s Medium-Term Budget Policy Statement tabled in Parliament last month.

The President [and] Cabinet have re-affirmed Government’s commitment to maintain a sustainable fiscal framework and ensure that a solution is found to address the roughly R40 billion gap that has been identified, through a combination of expenditure reductions and revenue-enhancing measures, the Presidency said in a statement here Monday.

The Presidency released the statement on the measures being taken to address economic challenges after international rating agency Standard and Poor’s lowered South Africa’s long-term foreign and local currency debt ratings by one notch each to ‘BB’ and ‘BB ‘ on Friday.

Another international rating agency, Moody’s, gave South Africa some reprieve by maintaining the country’s credit rating above junk status at Baa3 but it placed South Africa’s long-term foreign and local currency debt ratings of ‘Baa3’ on a 90-day review for a possible downgrade.

The Presidency said the Finance Minister would be assisted by the Presidential Fiscal Committee to find solutions to the challenges. President Zuma directed that technical discussions of the Presidential Fiscal Committee take place, led by Gigaba and the National Treasury.

These discussions will focus on four areas:

* To identify and finalise proposals for cuts in expenditure amounting to about 25 billion Rand. Such proposed cuts should not be in areas that will negatively affect economic growth prospects and job creation;

* To identify and finalize proposals for revenue-enhancing measures amounting to about 15 billion Rand, including where appropriate, tax measures;

* To develop a phased-implementation plan to enable the proposal for fee-free higher education for students from poor and working-class backgrounds, to be implemented in a fiscally-sustainable manner: and

* To identify the package of economic stimulus measures that will be implemented to enable the economy to grow at a faster rate.

The President has directed that the contents of these discussions should be considered for preparations of the 2018 Budget.

President Zuma will in the coming days meet with the Presidential Fiscal Committee to receive a progress report on the work done on these matters.