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Experts: Gigaba’s mid-term budget address disappointing & bleak

National Treasury is walking a tightrope, balancing South Africa’s books in a low economic growth environment.

FILE: Finance Minister Malusi Gigaba. Picture: EWN.

CAPE TOWN - Some experts say the mid-term Budget Policy Statement has left them disappointed, which is a sentiment that has been echoed by the financial markets.

Finance Minister Malusi Gigaba delivered his inaugural mini-budget in Parliament on Wednesday afternoon.

National Treasury is walking a tightrope, balancing South Africa’s books in a low economic growth environment.

Among the experts unimpressed by Gigaba’s mini-budget is political analyst Daniel Silke.

He has described the address as “bleak”.

“It was an honest assessment, nothing was hidden from the public but at the same time there were very few confidences building measures announced by the minister.”

Economist Jana van Deventer fears credit rating agencies might see it the same way.

“Projection for government borrowing requirements through the quarters of the next couple of years is greatly concerning. Total debt is seen rising to over R3 trillion. This heightens the risk for South Africa to receive further credit downgrades rather now than later.”

The rand weakened by just over 20 cents to the US dollar during Gigaba’s speech.

Malusi Gigaba's Medium Term Budget Policy Statement 2017

MTBPS 2017 Minister's Speech by Primedia Broadcasting on Scribd

CHALLENGES FACING SA

The Finance Minister has confirmed a tax revenue shortfall of R50.8 billion.

He says the budget deficit will stretch to 4.3% of GDP while growth for 2017 will be 0.7%.

He says South Africans are looking for progress and that the budget is still a platform for social and economic transformation.

“We’re giving an honest view of the challenges facing our country. It is not in the public nor is it in the interest of government to sugarcoat the state of our economy and the challenges we’re facing.”

Gigaba says international growth is improving and South Africa needs to benefit.

“We need to better position ourselves to take advantage of the improved global outlook and in turn strengthen our medium and long-term growth prospects.”

However, domestically he says transformation is far too slow.

“Direct black ownership and management of the economy remain extremely low. Employment equity remains a challenge with progress for black people and women participating at top and senior management levels, having apparently stalled.”

With regards to mining, he says all parties need to discuss the mining charter.

“It is critical that we resolve the impasse in the mining sector which is critical to the South African economy. Government and business must find common ground on a Mining Charter which attracts investment, advances transformation and benefits workers and communities.”

#MTBPS2017: The state of our finances

(Edited by Zamangwane Shange)