Budget Speech 2017
The Minister of Finance, Pravin Gardhan is heavily under pressure from all angles as South Africa is running out of fiscal space. This Budget is coming in the middle of controversial political pressure from certain quarters within the ANC calling for his removal from office. To add salt to the wound, the country is abuzz with demonstration demonstrations, picketing and matches for different reasons related to general high unemployment, unemployed graduates, poor performance of the economy, the list goes on.
The Minister will have to do the unpopular thing on Wednesday afternoon and raise taxes to boost state income to balance the books. With low economic growth and a dangerously looming state debt burden, South Africa has run out of fiscal space. Rumours that Gordhan will soon lose his job gained momentum over the weekend after the African National Congress in North West nominated the disgraced former head of Eskom, Brian Molefe, to Parliament.
Expressing her insight into the anticipated Budget Speech 2017, Associate Professor of Economics at the University of Fort Hare Munacinga Simatele had this to say on the performance of the economy in general:
“Fiscal space has declined. MTBS in October indicated a reduction in spending of about R26bn. This is accompanied by a need to raise an additional R43bn for expenditure. The key issue becomes how to raise the revenue to meet the demands of the budget.”
“What is expected is an increase in taxes, and this is likely to hurt the poor particularly with regards to VAT.”
On expenditure demands, she had this to say:
“Fees Must Fall Campaign is an immediate threat. There is a serious need to increase funding to the Ministry of Small Business Enterprise to impact job creation.
On the impact in the Eastern Cape she alluded to the fact that a significant proportion of the Eastern Cape is social grant dependant. Therefore, funding to this sector is very critical in addressing poverty.
“Funding to Agriculture and Land Reform in the Medium Term Budget was very marginal. The Eastern Cape is mainly rural, and requires attention.”