Gigaba stalling on tough decisions until the ANC elective conference
24 Oct 2017
The Medium Term Budget Policy Statement announced by Finance Minister Malusi Gigaba has not taken any steps to improve business confidence. "In fact, the trade-off between growth and an increase in debt has become all the more stark," says Investec Treasury Economist Tertia Jacobs in this podcast.
Gigaba stalling on tough decisions
ANC elective conference will determine the path of South Africa's politics going forward.
Use the time codes below to jump to topics of interest
01:07: The Finance Minister is not in a position to take any tough decisions until the outcome of the ANC Elective Conference in December is determined.
03:15: The budget deficit and revenue shortfall.
06:20: Possible credit downgrades due to the deterioration in South Africa’s debt ratios.
However Gigaba didn't address any of these issues, a move that Tertia believes is due to the fact that the "new Minister of Finance has not been in a position to make any tough decisions" until the outcome of the ANC elective conference in December is announced.
"This budget has not taken any steps to improve business confidence. In fact the trade-off between growth and an increase in debt has become all the more stark."
But as Gigaba didn't detail which assets will be sold, the SAA bailout "will be financed by tax collections, contributing to the wider budget deficit".
"Deterioration in South Africa’s debt ratios do signal increased probability of downgrades over the next two months."
Tertia Jacobs, Investec Treasury Economist
ANC elective conference will be a turning point in South Africa's economic policies
Gigaba gave no clear guidance in his speech about how additional revenues could be raised or how state-owned enterprises like SAA, the Post Office and SABC, will be financed.
"Essentially what this budget is telling us is that everything is on hold until a new ANC president is elected."
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