POLICY STATEMENT
BRIAN KANTOR: Gigaba’s budget commits SA to fiscal conservatism
‘What’s essential is a confidence-boosting conviction that the government is capable of ridding SA of the destructive crooks in command’
The medium-term budget policy statement delivered on Wednesday badly disappointed the market in the rand and RSA bonds. The rand subsequently lost about 3.3% of its dollar value and was nearly 4% weaker against other emerging market exchange rates. This indicates rand weakness and additional South African-specific risks at work. SA’s cost of raising funds for 10 years has risen by about 22 basis points, while five-year money has become 25 basis points more expensive for taxpayers. The spread investors receive as compensation for the risk that SA may default on its dollar-denominated debt has risen by about 13 basis points. Given that between now and 2020-21, SA will have to raise about R1-trillion to fund the growing deficit and roll over maturing debt, the budget statement has been a very expensive failure for taxpayers.Furthermore, by weakening the rand, widening the risks to our credit ratings and the rand, and adding to the inflation rate, the prospects for faster growth have de...
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