Gigaba’s budget: the horror, the horror
Gigaba’s first budget is going to reveal just how deep SA’s fiscal fault lines run. Prepare for a shocker
Finance minister Malusi Gigaba’s ability to stick to the fiscal consolidation path laid down by his predecessor, Pravin Gordhan, is the barometer by which the new minister stands to be judged when he presents his first medium-term budget next week. But as much as Gigaba has pledged to hold the line, he has little prospect of succeeding. There are two main reasons for this. The first is that Gordhan’s 2017 growth and revenue forecasts were made when there was still a reasonable prospect that the SA economy would bounce back from the drought and be able to take advantage of firmer commodity prices, better global growth and lower domestic inflation. But Zuma’s axing of Gordhan and his deputy, Mcebisi Jonas, in March destroyed what little business and investor confidence remained and caused the immediate junking of SA’s foreign-currency credit rating. Economists are now expecting a revenue shortfall of R35bn-R50bn for the fiscal year because growth and tax revenue have underperformed di...
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