NewsSouthern AfricaSouth Africa: Economists and opposition give budget the thumbs up


Posted on Thursday, 27 February 2014 13:16

South Africa: Economists and opposition give budget the thumbs up

By Crystal van Vyk

Analysts say Finance minister, Pravin Gordhan's budget is sound and will boost confidence in South Africa's fiscal policyThe South African budget, presented on Wednesday, with emphasis on cost cutting and focusing on service delivery, has been given the thumbs up by economists and opposition parties, who say this is the direction the fiscal policy should be taking.

Leading moneyweb analyst, Ryk van Niekerk said Finance minister, Pravin Gordhan's budget was sound and would boost confidence in South Africa's fiscal policy.

we are cutting the fat, we are doing what needs to be done and government money is no longer easy money

"Unfortunately, it also highlights the massive gap between (mostly) good policy formulation and dreadful implementation," van Nierkerk said.

The theme for Gordhan's budget was "Reprioritising spending and keeping a tight lease on spending".

He forecast a 2.7% economic growth, which is expected to rise to 3.2% next year and 3.5% in 2016.

Gross government debt is expected to stabilise at about 48.3% of gross domestic product (GDP) in 2016-17, Gordhan said.

Opposition Democratic Alliance official, Tim Harris said the Finance Minister tabled "a budget that holds the line against populist pressure, but provides no real tax concessions and few bold reforms to get growth going or tackle unemployment".

Harris said the failure to offer tax concessions was because Gordhan knew President Jacob Zuma was not going to back brave reforms in the face vested interests in the ruling party's tripartite alliance.

The question of how government would juggle the competing priorities for its R1.02 trillion budget has been brought to the fore.

Social spending including social grants, education and health remains the largest component of government expenditure. It is projected to increase from R30 billion in 2012/13 to R43 billion in 2016/17.

Gordhan said the government has spent more than R100 billion on employment programmes over the past five years, including municipal and provincial spending.

More than 4 million job opportunities were funded over this time. Allocations will continue to grow strongly, and 6 million job opportunities are expected to be created over the next five years.

South Africa's biggest trade union federation, Confederation of South African Trade Unions (COSATU) welcomed an increase in the overall budget allocations, despite the constraints government faces due to the slow domestic and global economic growth.

"We particularly welcome an increase in the infrastructure budget by R847 billion over a period of three years. This will go a long way in catalysing economic growth and job creation," COSATU said.

ANC secretary general, Gwede Mantashe said they were happy with the "tight budget" and warned that government could only go so far and the private sector had to come on board.

"This budget moves away from ANC sloganeering because slogans don't bring solutions. We are bringing practical solutions to the growing unemployment and social ills," he said.

Mantashe had a stern warning to big spenders in government, saying "we are cutting the fat, we are doing what needs to be done and government money is no longer easy money".

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