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REACTION TO BUDGET SPEECH

REACTION TO BUDGET SPEECH 

 

General:

  • Budget comes at a very difficult time for South Africa, and the world economy in general.
  • The economy needs a stimulus to help the country pull out of the low-growth cycle that we had been on for some years now, even the onset of the Covid-19 pandemic.
  • If ever there was an impetus required for the country to arrest wastage and looting, this budget should be it – the coffers are empty and if we carry on at this rate, another economic shock will send the country over the fiscal cliff.

The good:

  • The Minister has wisely not raised direct taxes as our businesses and individuals are already hard-pressed, with many in a precarious financial position due to the impact of Covid-19.
  • We commend the Minister that he has avoided giving us an austerity budget which would have been the final nail in the coffin as far as our battered economy is concerned.
  • Commitment by the National Treasury to see through the process of fiscal consolidation despite the very limited fiscal room.

The bad:

  • In a tough economic environment, we were hoping to see a set of measures that would be a game-changer for South Africa – release the brakes and get the economy growing again at a much faster rate.
  • There was very little that was new.
  • We are still reeling from sovereign credit downgrades, we need to show the world that while we are in recovery mode, we have clarity and certainty about where we are going. We have an image problem, the damaged wrought by a collapsing Eskom has tarnished our prospects as an investment destination, we therefore need to pull out all the stops.

What we want to see in future:

  • The good times are over, we cannot live beyond our means. Reform is more urgent than ever. The hard decisions have to be taken now – restructuring of the state and eliminating duplications. South Africa can no longer afford to provide cushy jobs for recycled ruling party cadres. We have too many cabinet ministers.
  • We need competition to be introduced into many of the sectors of the economy, this will create room for new players, create jobs and improve consumer welfare through lower prices.
  • Sell loss-making state owned entities or at least introduce private sector players and run these according to accepted corporate governance principles without government interference.

The way to a better budget is not through higher taxes but through cost containment and higher economic growth rates.

 

ISSUED BY: CHANGE FINANCE TEAM