Pragmatic Budget

IT’S TEMPTING to say Finance Minister Pravin Gordhan has been here before, but the truth is this Budget speech was the most important in many years. Fresh off the disastrous shuffling of Treasury heads from the respected Nhlanhla Nene to little known Des van Rooyen and then to himself, Gordhan had to try and reassure investors that things were back on track, stave off a damaging ratings agency downgrade to junk status, give some succour to the poor and unemployed and boost slow growth. All on a fairly tight budget which forced him to further squeeze some sectors.

Gordhan trimmed GDP growth forecasts to 0.9 percent this year, 1.7 percent in 2017 and 2.4 percent in 2018, which seems realistic.

He announced plans to curb the budget deficit by up to 2.4 percent by 2018/19 and trim R25 billion off state spending on proposed projects over the next three years.

Tax increases will raise an additional R48 billion over the next three years but there will be some personal income tax relief for lower and middle-income earners. Levies for alcohol, plastic bags, sugar and various other goods will also go a fair way to increasing the pot.

The poor again received some relief. There will be no increase in VAT and an additional R11.5bn will be allocated for social grants.

Small business, higher education and agriculture will all get millions more over the next few years. Although big business will probably bemoan the fact there was no major announcement on privatisation.