What the Medium Term Budget Policy Statement holds for you
While drama surrounding finance minister Pravin Gordhan continues, he has also gained support from those who believe the fraud charges against him do not hold water. Gordhan who has been charged with fraud and theft for the early retirement of his former deputy Ivan Pillay when he was the commissioner at the SA Revenue Service is due to deliver his medium-term budget policy statement this afternoon. The point of the MTBPS is to outline how the National Treasury plans to ensure the budget deficit returns to its surplus, with the GDP still being below the Reserve Bank’s target band. The possibility of taxes being increased is also still a factor – that is meant to absorb the projected R15, billion increase for the 2017/18 financial year. Gordhan gave a hint during the budget speech in February that an increase in taxes may be on the cards.
Looking at expenditure projections, the minister may bring relief in the education sector. Amid ongoing student protests at the country’s universities, Gordhan has called for citizens to submit their ideas on how free education can be funded in efforts to address issues faced by higher education institutions.
The current political climate with the Hawks and the National Prosecuting Authority charging the finance minister with fraud is really like adding salt to a deep wound of tough economic times. Gordhan has reportedly said that the charges leveled against him are frivolous and will not derail him from delivering his mandate. Speaking at a UASA briefing in Boksburg last week, in Boksburg last week – Gordhan said the country has made significant progress in trying to avert a downgrade however it is still a concern. Earlier this year ratings agencies, Moody’s, S&P and Fitch visited the country and cited concern over the manner in which the country’s state-owned enterprises were being run. Following those pronouncements, Africa’s biggest lender Futuregrowth halted its lending to six companies which includes Eskom, Transnet, and SA Airways. This further sent shockwaves to investors who were becoming worried about the independence of the Finance ministry.
The state capture report is also sticking out like a sore thumb, making the mini- budget the most anticipated report in a decade.
A week ago the minister filed an affidavit with the High court, declaring that he may not get involved with the process of the bank’s decision to close accounts with Oakbay Investments which is a company owned by the Guptas. In the application, the minister supported his argument by revealing a report from the Financial Intelligence Centre, detailing transactions made by the Gupta linked company between 2012 and 2016. The transactions are valued at R6.8million. This showed that the country’s four major banks may have had a reason to close business with the companies.
As all these issues continue to cloud judgment on what the minister will bring forward to South Africans about how the economy can be revived when he delivers his statement.
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