Gigaba to play it safe during first budget address?
All eyes will be on Malusi Gigaba to see whether he continues on the path of prudence carved by his predecessor, Pravin Gordhan.
CAPE TOWN - Finance Minister Malusi Gigaba could play it safe when he delivers his medium term budget policy statement this afternoon holding off on bold moves until his main budget in February next year.
By then the dust will have settled after the African National Congress (ANC) elects a new leadership in December.
Gigaba will unveil government’s spending plans and growth forecasts for the next three years against a backdrop of fierce political contestation and financial and economic indicators that are all pointing in the wrong direction.
All eyes will be on Gigaba to see whether he continues on the path of prudence carved by his predecessor, Pravin Gordhan.
While some economists expect him to play a holding game, Investec’s Nazmeera Moolla says there will be long-term consequences for the decisions he unveils today and that these shouldn’t be underestimated.
“Simply assuming we can make that decision now, hopefully get a positive electoral outcome from the ANC’s conference in December and then stabilise the country’s finances next year, is naïve.”
Gigaba has to try and avert further downgrades by ratings agencies.
“We will see the impact in terms of credit ratings to start with and then outflows from our bond markets and while at times we like to pretend that we don’t need foreigners, the entire government deficit this year has been funded by foreign inflows into the local bond market.”