Finance Minister Pravin Gordhan’s medium-term budget policy statement is good for the economy but spoilt by the political outlook in terms of improving the country’s fortunes.
Political analyst Zamikhaya Maseti said Gordhan made a good statement that would help the economy in the long run, such as more funding for infrastructure development, which could boost domestic and foreign direct investment.
He said any increase in private sector investment would resuscitate the economy from its state of near paralysis. But Maseti stressed the political situation could put a damper on the budget. He said the fact that Gordhan was facing criminal charges and the uncertainty surrounding the public protector’s report regarding state capture were among the factors investors would be uneasy about.
According to the analyst, the minister’s tone on sovereign credit rating lacked enthusiasm, pointing to a possible downgrade down the line. He said lessons from Greece, Spain and Turkey showed that political instability had a direct bearing on those countries being downgraded to junk status.
“This is possible in South Africa if you consider our political outlook,” Maseti said. Gordhan announced university funding would grow at 10.9%, with a whopping 18.5% growth to the National Student Financial Aid Scheme. An additional R17 billion would be allocated to universities and for students during the medium-term.
Maseti said this was “good news if striking students listened carefully”. He described Gordhan’s budget as “very balanced”, saying the minister had addressed various programmes. But it was worrying that he attempted to boost the economy by increasing revenue, meaning taxpayers had to cough up more.
“Our economy relies too much on increasing taxes, milking our taxpayers. Rather, he should find means to rekindle the economy, such as increasing domestic consumer demands and cutting on social spending.”
Analyst Steven Friedman said he was disappointed universities had not benefitted from Gordhan’s budget in the manner they expected. “The minister encourages dialogue and partnerships based on his belief that we all have a stake in the economy,” Friedman said.
Political analyst Susan Booysen said Gordhan’s budget could be interpreted with what was happening to him politically. He reprimanded those who were pursuing him and spoke strongly against elitism that we see in our politics and economics.
“It was very evident that he was responding to his foes,” Booysen said.