The announcement came as global ratings agency S&P downgraded the country’s local currency to a ‘sub-investment grade’ last week, while Moody’s placed the sovereign on review for a downgrade.

S&P downgraded the rand from BBB-  [a ‘lower medium grade’] to BB+. 

“The downgrade reflects our opinion of further deterioration of South Africa’s economic outlook and its public finances,” S&P said.

It also added that it now forecasts the economy will grow 0.7% this year and 1% next year.

The president and the cabinet also re-affirmed the government’s commitments to ensure that the 40bn rand (about £2.18bn) revenue gap would be addressed through a combination of “expenditure reductions” and “revenue-enhancing measures”.

Minister of finance Malusi Gigaba is expected to lead the technical discussions of the presidential fiscal committee, to prepare for the 2018 budget.

The South African treasury said in a response to the downgrade: “The 2018 Budget will outline decisive and specific policy measures to strengthen the fiscal framework, as an important contributor to improved confidence of all stakeholders, and a return to inclusive growth.”

It said the government would address the “root causes” of the revenue gap “arising from the underperforming economy and a possible erosion of revenue collection capability”.

The committee would also develop a phased-implementation plan to enable the proposal for fee-free higher education for students in poor and working-class backgrounds, the presidency said.

The South African rand dropped against the dollar after Zuma announced a surprise cabinet reshuffle in October.