Gi­gaba should take pos­i­tive steps

Financial Mail - - YOU SAID... - Ted O’con­nor Al­bert­skroon

The midterm bud­get pol­icy state­ment pre­sented by fi­nance min­is­ter Malusi Gi­gaba this week will pro­vide no com­fort to SA, as he ad­mits that tax col­lec­tions fell far short of ex­pec­ta­tions and, with an ever in­creas­ing na­tional debt, make it more ex­pen­sive to bor­row to cover the short­fall.

He is severely lim­ited in his op­tions to raise the fi­nance to meet gov­ern­ment’s bud­get. He could make it com­pul­sory for in­sur­ers and banks to in­vest in trea­sury bills, in­crease com­pany tax and pe­nalise high earn­ers, but these will be detri­men­tal to long-term growth.

What he should do, of course, is to cut civil ser­vice em­ploy­ment, in­crease Vat by a per­cent­age point and sell off the state-owned en­ter­prises, whose debt now tops R300bn.

Af­ter all, the func­tion of gov­ern­ment is to gov­ern, not to trade, and to cur­tail cor­rup­tion, which is the big­gest im­ped­i­ment to growth.

Trea­sury has lost tal­ented staff since for­mer fi­nance min­is­ter Pravin Gord­han was fired, and Gi­gaba seems to lack the imag­i­na­tion or the per­sonal strength to en­force un­pop­u­lar mea­sures that will ease the coun­try’s eco­nomic woes.

The rat­ing agen­cies that have us on re­view will need to take some­thing pos­i­tive from the bud­get, fail­ing which a fis­cal cliff awaits us.

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