Gordhan advised to focus on SOEs in Budget speech

An academic says wasteful expenditure by state-owned entities should be the focal point of the upcoming Budget speech.

Finance Minister Pravin Gordhan speaks to potential investors at a Brand South Africa briefing at the World Economic Forum in Switerland on 17 January 2017. Picture: Reinart Toerien/EWN

CAPE TOWN - Wasteful expenditure by state-owned entities (SOEs) should be the focal point of the upcoming Budget speech, to prevent a credit ratings downgrade, according to an academic.

The country has been able to remain above sub-investment grade amid stern warnings from various ratings agencies.

University of Cape Town lecturer and author Sean Gossle says he would advise Finance Minister Pravin Gordhan to stick to his cost-cutting trajectory in his upcoming Budget speech.

But he adds Gordhan should zoom in on South Africa's failing parastatals to further appease credit ratings agencies.

“They do need to be restructured, with privatisation in some form to make efficient because at the moment they are a drain to the economy. They are not creating an environment that’s conducive for the economy.”

He says the Presidency should do more to back Gordhan’s position as finance minister.

(Edited by Shimoney Regter)