All eyes on Pravin
Finance Minister Gordhan’s budget speech today is ‘under a cloud of state capture’ – and he faces a tough balancing act, analysts say.
Analysts say Gordhan’s speech will be delivered ‘under a cloud of state capture’.
As the country today awaits Finance Minister Pravin Gordhan’s budget speech, delivered “under a cloud of state capture”, the question remains whether emphasis will be placed on radical economic transformation.
This follows President Jacob Zuma’s reference to radical economic transformation in his State of the Nation address (Sona) earlier this month.
According to analysts, Gordhan faces a challenging “balancing act”.
“At Sona, Zuma spoke at length about radical economic transformation. While this is likely to be a key theme in the 2017 national budget, it is important to note transformation of any kind takes time,” said Novare economic strategist Tumisho Grater.
“It is safe to say that balancing economic transformation, social responsibilities and ensuring that South Africa is on a path of fiscal consolidation will be a difficult balancing act for the minister.”
According to economist Azar Jammine, all Gordhan can do is press ahead on the issue of fiscal consolidation and commit himself to continue on that path.
“The budget will also be under a cloud of state capture and the meaning of [former Eskom CEO] Brian Molefe’s appointment as an MP,” said Jammine.
“Allocation-wise, there is the theme of the ANC for radical economic transformation. So he will be concentrating on social expenditure,” he predicted.
“A lot of focus will be on whether he will get his R28 billion to raise taxes on.”
UJ Associate Professor of economics Nicholas Ngepah echoed that there was a need for Gordhan to balance radical economic transformation in trying to allow for the economy to stabilise.
“One of the key issues … is the call for radical economic transformation,” said Ngepah. “This would be a shock to the economy. Economies don’t like shocks – they are difficult to deal with, good or bad.”
He added that the new radical approach was an important call and long overdue.
“It’s overdue but implementation could be a problem for the South African economy. We have spent 20 years not doing that. Government should have tackled it long ago and by now we would have been in the final stages.
“It might happen too abruptly, but the finance minister is pragmatic and knows this well. He is likely to take a levelled decision.”
Political analyst Daniel Silke said while Gordhan was likely to make reference to the need for economic transformation, it was the figures which are going to matter rather than big policy issues.
“The rhetoric from the ANC is on transformation. This you can have if the pie is big enough for all to enjoy. One must create a bigger pie and then you can do this,” said Silke.
“You need good economic growth and a credible state and you can’t talk about that coming from the state.
“It’s nice in theory, but only if it is done transparently. He will talk about the need for economic change but will also show ways to grow the economy. He will talk about creating a more capable state.”
Politically, this is a budget where Gordhan will present as a government minister from only one faction within the ANC, added Silke.
“It will be very different from what other parts of the ANC would like to see.” –