Five charts showing Gordhan's budget predicament
Political infighting is stifling economic growth efforts and the budget gap seen at 3.2% of GDP in 2017-18, survey shows
South African Finance Minister Pravin Gordhan has to weigh the impact of higher taxes and reduced government spending on growth as he tries to keep the country’s investment-grade credit rating. Political infighting has stifled efforts to boost confidence in the economy and increase growth and therefore tax revenue. Economic expansion probably decelerated to 0.4 percent last year, according to the central bank, the slowest rate since a 2009 recession. That’s hindered efforts to rein in the budget deficit and limit government debt. “The only feasible, sustainable way of working ourselves out of this problem is to grow this economy,” said Ernie Lai King, head of taxation at Hogan Lovells U.S. LLP in Johannesburg. In October, Gordhan said tax-policy measures will raise an extra 43 billion rand ($3.3 billion) and spending will be reduced by 26 billion rand in the next two years to narrow the budget shortfall. Gordhan may raise personal-income taxes, following former Finance Minister Nhla...
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