Time to deliver on Gordhan’s budget

As expected, Finance Minister Pravin Gordhan announced further austerity measures aimed at resuscitating the country’s ailing economy. His message was clear: “The state cannot spend money it does not have and cannot borrow money beyond its ability to repay.” Since his reappointment in December, Gordhan has consistently been talking tough on wasteful expenditure and corruption, and yesterday was no different. Recently he ruffled feathers when he pulled the plug on the Gupta-owned The New Age newspaper’s postbudget breakfast briefing. The breakfasts, broadcast by the SABC, have become a regular money-spinner for the paper. Yesterday, Gordhan announced another major cost-saving decision, which will be seen as targeting those with close links to President Jacob Zuma.

Although there was no major announcement on privatisation, Gordhan revealed that he and Public Enterprises Minister Lynne Brown were exploring the possible merger of ailing South African Airways (SAA) and SA Express “under a strengthened board, with a view to engaging with a potential minority equity partner, and to create a bigger and more operationally efficient airline”. Gordhan had bad news for state entities such as SAA, notorious for asking bailouts worth billions. “Further financial support to state-owned companies will depend on clarity of this mandate and firm resolution of governance challenges,” Gordhan said.

Any action targeting the SAA board could be seen to be a move aimed at kicking out board chair Dudu Myeni, a close associate of Zuma and accused of being behind the carrier’s loss-making plague. Overall, there were many positives that came out of Gordhan’s measured budget. However, the challenge is for government to deliver on what he announced. If what Gordhan delivered yesterday could be implemented, it will set the country on the path to economic recovery.

But it remains to be seen whether the budget will be enough to prevent the country from being downgraded to junk status by ratings agencies.