Of course, anyone with financial interest in South Africa will be watching closely as Pravin Gordhan presents his mini budget speech at 2 PM today (we’ll have a live stream).
It’s no secret South Africa is under immense financial strain, as #FeesMustFall protests sit along-side general service delivery demonstrations, crippling corruption charges, and what seems to be a never-ending, “democratic” selection of inadequate and extremely biased political officials.
Oh, and let’s not forget Gordhan’s appearance in court in the upcoming week on charges of fraud.
So what can we expect from Gordhan today? IOL details:
[H]e [Gordhan] will likely stick to the task in hand – which includes boosting growth, trimming debt and saving SA from a ratings downgrade in December.
SA is at risk of losing its investment-grade credit rating as S&P Global Ratings and Fitch Ratings, which put South Africa a notch above junk, are due to review their assessments by the end of the year. Moody’s – the other big 3 agency – has SA 2 levels above junk, but is also set to review the grade in December.
A cut to junk status will make it more expensive for SA to borrow money, and will also adversely affect foreign direct investment, which the country desperately needs.
One of Gordhan’s biggest challenges will be trimming debt as well as the budget deficit: the difference between what the economy is worth and what SA Inc spends. In February, Gordhan projected the shortfall would come in at 3.2 percent by the end of the fiscal year, but Bloomberg reported on Tuesday that – based on a survey – the shortfall may be 3.4 percent of gross domestic product.
Gordhan is also likely to indicate whether taxes will go up In February as the Mid-Term Budget Policy Statement is not when these announcements are made, but rather a time to look back at he first half of the year and adjust spending based on priorities.
As such, the #FeesMustFall movement may score a victory if money is shuffled away from other departments into Higher Education.
Gordhan also has to deal with an economy that will grow at less than a percent this year – which is a far cry from what is needed to create jobs. Consequently, he may provide stimulus to business, especially small and medium enterprises.
In addition, more belt tightening by government is likely to come through in the speech, along with a heavy hand on corruption so that SA gets the most out of what is being spent.
Of course, whatever Gordhan has to say, the Rand will surely jump up or down a few cents, but let’s just hope there are no underhand moves played out while Gordhan takes the stand.
[source:iol]
[imagesource: Sararat Rangsiwuthaporn] A woman in Thailand, dubbed 'Am Cyanide' by Thai...
[imagesource:renemagritte.org] A René Magritte painting portraying an eerily lighted s...
[imagesource: Alison Botha] Gqeberha rape survivor Alison Botha, a beacon of resilience...
[imagesource:mcqp/facebook] Clutch your pearls for South Africa’s favourite LGBTQIA+ ce...
[imagesource:capetown.gov] The City of Cape Town’s Mayoral Committee has approved the...