Gordhan faces balancing act:
Africa
South Africa’s Finance Minister Pravin Gordhan faces a tough balancing act on Wednesday when he unveils a midterm budget meant to boost the sickly economy and show his looming fraud case is not distracting him.
Gordhan has said he plans to reduce government spending, raise taxes and cut the budget deficit to 3.2 percent of gross domestic product (GDP) in the 2016/17 fiscal year, from 3.9 percent in the previous year.
But closer on his horizon are a Nov 2 court appearance on fraud charges that he has dismissed as politically motivated, and pressure to provide more subsidies for students who have staged violent protests to demand free university education.
Analysts say any fiscal slippage could trigger credit ratings cuts to “junk”, and see little room for manoeuvre in an economy the central bank expects to grow by 0.4 percent this year.
“There is currently no space to loosen fiscal policy, or do much expenditure switching, ahead of 2019 national election,” said Maya Senussi, senior emerging markets analyst at Roubini Global Economics.
“With the political machinations, it becomes difficult for Gordhan to put something on the table that says we are re-engineering the economy for a different path,” Investment Solutions chief economist Lesiba Mothata said. (RTRS)
Gordhan