South Africans urged to 'tighten their belts'
Finance Minister Pravin Gordhan tabled his 2014 budget in Parliament yesterday afternoon.
CAPE TOWN - While many economists, private corporations and politicians have welcomed certain aspects of Finance Minister Pravin Gordhan's Budget Speech, others are sceptical.
He said the focus for the next five years will be on growth, development and jobs, which will be guided by the National Development Plan.
But the bad news is fuel levies will rise and consumers will now pay more for cigarettes and alcohol.
Gordhan warned that while the country's through the worst of the five-year recession, there are still risks ahead.
He called on all South Africans to spend their money carefully because of the current economic situation.
"Our present circumstances oblige us to live and spend modestly and keep a careful balance between social expenditure and support for growth. It's not an either or question."
Gordhan said the economy will grow at 2. 7 percent but needs to grow almost twice as fast to create jobs.
He kept a balance between spending on grants, education and health and support for the economy while aiming to trim the government's overdraft.
"It was a bragging budget speech. The minister told us everything they have achieved, but didn't address the real and main issues. The main issues are: there are too many people depending on the state, social expenditure is simply too high and civil servants are overworked and underpaid."
Afrisake's Cornelius Jansen van Rensburg says the budget isn't balanced and shows the harsh realities the country is currently facing.
"The budget doesn't allow us to focus on economic growth, and given that fact it would be a very cautious welcoming of the budget."
But the South African Chamber of Commerce and Industry believes Gordhan's Budget will go a long way in achieving financial stability in the country.
The chamber's Pietman Roos says they think it was a very positive speech.
"It's always said Minister Gordhan is placed under immense pressure and this year was no exception. What he did very well was to reassure investors that South Africa is managing its fiscal path."
Political parties have also reacted to Gordhan's speech with the Democratic Alliance (DA) describing his budget as very conservative and critcising him for not doing enough to boost economic growth.
DA spokesman on finance, Tim Harris, doesn't believe government is doing enough to help small businesses and create jobs in a sluggish economy.
"We needed more tax breaks and more incentives to try and get small businesses going."
Inkatha Freedom Party leader Mangosuthu Buthelezi says other emerging economies such as Turkey and India have shown that growth is possible in the current economic climate.
"I don't think there were any earthquake moving things that one can write home about as far as this budget is concerned."
The African Christian Democratic Party called the budget a 'balance budget' given the minister had little room to manoeuvre.
But the Freedom Front Plus believes the minister is trying to appease voters by increasing grants.
BUDGET A 'DIFFICULT BALANCE'
Meanwhile, Gordhan said it's a difficult task to reconcile the various factors in government's allowance.
"Whether it's a household or a country, the most difficult thing to balance is the demand for money on the one hand and the availability of money on the other. Budgets are about making sure we keep the right balances.
"We have to keep a careful eye on how much we are borrowing, how much we are spending, what revenue we are getting and what debt service costs or interest we will be paying."
The minister said balancing spending on support for the poor and trying to support the economy itself is a crucial task.
Gordhan also disputed claims his budget wasn't aggressive enough and was too conservative in its reforms.
He said balancing the fiscus by ensuring that debt doesn't spiral upwards requires responsible decisions.
"I think that being expansionary without recognising the consequences of that is poor management of our finances. That is not why the public put us where we are.
"Ultimately, we have to grow this economy so that we can get more revenue. We can't just talk about the spending side."
For EWN's full coverage of the Budget Speech, go to the Budget portal.