BNP Paribas SA economist Jeffrey Schultz has revised his growth estimate to 0.7% in 2017, rising to 1.3% and 1.5% in the subsequent years.

"The prospect of sustained low growth over the medium term remains the greatest risk to our fiscal policy objectives and limits governments ability to generate more revenue. Further consolidation measures may be required to ensure fiscal sustainability," Gigaba told MPs.

The first-quarter contraction, he said, "introduces significant downward bias in the GDP growth estimates" contained in the 2017 Budget Review, which forecast growth of 1.3%.

If sustained, this growth rate "will lead to further decline in GDP per capita and revenue, threatening the affordability of our planned expenditure. This puts more pressure on us as government to intensify our growth programme and improve confidence as a matter of urgency," Gigaba said.

He said the Cabinet had committed to provide clarity and certainty on key policy issues with the aim of unlocking growth in the economy in the next few weeks. Timelines for the finalisation of these policies would be announced soon.

Gigaba said the government was also committed to a "speedy response" to the issues raised by credit ratings agencies.

He reiterated the governments commitment to reduce the budget deficit over the next three years to 3.3% and to stabilise debt as a percentage of GDP. It was also committed to achieving greater efficiency and to stabilising the share of the public sector wage bill of total government expenditure. Personnel trends in all departments were being closely monitored. Measures were under consideration to generate more taxes over the medium term.

The DA, EFF, Congress of the People, the African Christian Democratic Party and the Freedom Front Plus objected to the passage of the bill.

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Fiscal targets at risk, says Gigaba - BusinessLIVE - Business Day (registration)