#Budget2016: Gordhan faces two big hurdles

Yesterday Pravin Gordhan detailed measures aimed at jumpstarting economic growth.

Finance Minister Pravin Gordhan delivering his national Budget speech in Parliament on 24 February 2016. Picture: GCIS.

CAPE TOWN - Finance Minister Pravin Gordhan faces two big hurdles after his Budget balancing act; one is whether international ratings agencies will believe that he's done enough to prevent the country being downgraded to junk status, while the other is whether government will be able to implement his plans to cut wasteful spending, curb corruption and spend taxpayers' money efficiently.

Yesterday, Gordhan detailed numerous measures aimed at cutting back on wasteful spending by the state and jumpstarting economic growth.

Today he will be briefing business and Members of Parliament (MPs) on the Budget.

WATCH:#Budget2016 in 60 seconds

Gordhan delivered his Budget speech with his back against an economic wall, but managed to present a practical plan, balancing competing demands on a depleted public purse.

"The choices we make cannot meet every need, and the action we require involves collective action by many stakeholders".

Gordhan chose to raise revenue by hiking levies and introducing new ones on tyres and fizzy drinks rather than stifling economic growth by increasing personal income and company tax.

"We are resolved to restore the momentum of growth, to ensure it is inclusive and sustainable, and to preserve our economy's investment grade status."

Whether the minister's Budget will reassure international ratings agencies remains to be seen, while his plans for cutting billions in government spending and curbing corruption will depend on his words being translated into action.


Some opposition parties believe the finance minister has done enough to stave off a possible ratings downgrade.

But the Democratic Alliance (DA) is not convinced, saying Gordhan's announced no new measures to boost economic growth, one of the factors ratings agencies will be looking at.

The markets reacted sharply yesterday to the Budget and news that Moody's downgraded Brazil to junk status.

The rand dropped from R15.21 to the dollar early in the day, to R15.66 by late afternoon.

WATCH: _#Budget2016: Gordhan announces R5.5bn tax relief _

DA MP David Maynier says the minister fell short.

"I was disappointed. At the end of the day it's about whether the minister made any statement that would promote economic growth and jobs, and we don't think he went far enough. There were no new measures announced to promote economic growth in South Africa."

Economic Freedom Fighters (EFF) leader Julius Malema, on the other hand, says the minister hit the right notes.

"The commitment to run a tight ship and to ensure that he minimises unnecessary cost and combats corruption - those are the necessary steps to assuring the credit rating."

The United Democratic Movement (UDM)'s Nqabayomzi Kwankwa says it's a balanced Budget.

"Overall it was a balanced budget. The minister was able to maintain a fair balance between social spending and embarking on a fiscal consolidation programme, which is not easy."

The African Christian Democratic Party (ACDP) is optimistic, saying the minister has done enough to prevent a ratings downgrade.


Gordhan says government will conduct a wide ranging review of its programmes to determine which ones need to be scaled down or cut to save costs and has called on big business to support smaller enterprises, to encourage growth.

In a breakfast briefing with eNCA this morning, the minister outlined the highlights from his speech and what South Africans can expect in the coming year.

He says the Department of Performance Monitoring and Evaluation will assess which government programmes are wasting money.

"Minister Jeff Radebe's department is actually going to ask tough questions about which programmes work, which programmes are necessary, which programmes need to be cut and which need to be promoted."

Gordhan says while government needs to invest more to grow the economy, big business also needs to do more.

"We're a concentrated economy. The emphasis on small and medium size business is very important and the support for them. This is one of the conversations that we've had with big business in South Africa."


Gordhan says some of the red tape hindering small business owners will be cut.

It was one of a raft of measures he announced in his Budget speech to help rejuvenate the country's beleaguered economy.

Gordhan announced a 'one-stop-counter' will be made available at the South African Revenue Service (Sars) for small business owners filing their taxes.

Business Partners's Ben Bierman welcomed the announcement.

"I think it's significant and sends the right signal. I think it will help the small business owner immensely."


Meanwhile, Sars Commissioner Tom Moyane was conspicuous by his absence when the minister briefed journalists ahead of delivering his Budget speech.

Gordhan was flanked by his deputy and director-general and South African Reserve Bank Governor Lesetja Kganyago, but no seat was allocated for Moyane.

Moyane launched a probe into claims of a so-called rogue unit at Sars, but investigators were ordered not to interview Gordhan.

Since Gordhan's appointment as finance minister in December, he and Moyane have butted heads over Moyane's apparent determination to restructure the institution.

Eyewitness News asked Gordhan where Moyane was, to which he responded, "I think it's no secret that we have a set of issues to resolve in this institution and that in due course we are confident that we will resolve those issues."

The minister says the outcome will be made public.

He expressed absolute confidence in Sars's 1,400 employees' commitment to "ensuring their work is not compromised in any way".