Nothing to cheer in Gigaba budget

There was good and bad news from Finance Minister Malusi Gigaba’s maiden medium-term budget speech, which he delivered in parliament yesterday. The bad news is there was no good news. The only positive thing to emerge from the litany of grim tidings from the minister was the fact that he didn’t announce any increases in tax.

The bad news is that, because our government is bankrupt, he probably won’t be able to avoid significant increases in either direct or indirect taxation … or both. It is likely the axe will fall on already hardpressed consumers in his full budget early next year.

And it is likely he will have to drastically slash government spending if he is to keep the spiralling budget deficit – which already stands at 4.3% of gross domestic product – under control.

Gigaba’s experts have adjusted the growth prediction for this year downwards from 1.3% to just 0.7%. The picture gets slightly better, with growth in 2018 forecast at 1.1% and in 2019 at 1.5%.

The really horrifying figures he presented to lawmakers were those relating to the revenue shortfall in the next few years. This year – 2017-18 – it will be R50.8 billion, the highest on record. In 2018-19, the difference will shoot up to R69.3 billion, while the following year it will hit a staggering R89.4 billion.

The figures were enough to send the rand plunging to 10-month lows against foreign currencies yesterday.

By not tackling the issue of increasing tax or cutting spending, Gigaba is clearly ensuring his boss, President Jacob Zuma, looks a lot better at the ANC’s December elective conference, where Nkosazana Dlamini-Zuma is his anointed successor as ANC leader.

After December, though, when a new leader is in place, it will not matter.

Cynical, very cynical …