Gigaba’s maiden mini-budget speech will need to ‘inspire’ investor confidence
Wednesday's medium term budget policy statement will be a "defining moment" for finance minister Malusi Gigaba who is not "trusted by the markets"‚ says the Democratic Alliance.
Democratic Alliance spokesman on finance David Maynier said at a pre-MTBPS media conference on Monday that Gigaba's maiden budget speech as finance minister would need to "inspire confidence" in investors and South Africans alike‚ but that he believed the minister had very little "political space in which to manoeuvre".
Maynier said that Gigaba would need to tackle five big challenges in his statement‚ among them weak economic growth‚ which he believes will be revised down to about 0.6% for 2017 (from a February forecast of 1.3%)‚ and "fiscal slippage" which will see the fiscal deficit increase and revenue fall. Maynier projects a revenue shortfall of about R56-billion for the 2017/18 year.
Maynier said the minister should also focus on "institutional vulnerability" with the autonomy of the Reserve Bank‚ the Public Investment Corporation and the Treasury all currently under threat.
He said Gigaba who is "not trusted‚ especially by the markets" needed to make a "strong and unequivocal statement to the state capturers" that supports the independence of the Reserve Bank‚ PIC and Treasury.
The fourth area of focus should be what deputy spokesman on finance for the party Alf Lees termed "zombie-state owned enterprises"- such as the massive loss generating South African Airways.
Lees said "the minister will have no option but to provide for both an emergency bailout of SAA‚ totalling R5.2-billion and a further R4.8-billion for working capital in the adjustments budget".
The fifth area of concern was "long term fiscal risks" such as the nuclear plan. Maynier said a Sunday Times report at the weekend that new energy minister David Mahlobo was appointed after a warning from the Russians to push the project through "signals an intention to accelerate the programme‚ which is terrifying".
Mahlobo meanwhile made his maiden speech as energy minister at the Africa oil and gas conference in Cape Town on Tuesday‚ saying "South Africa recognises the role of nuclear power in ensuring security of energy supply and meeting the challenge of climate change. We promote an energy mix of coal‚ gas‚ renewables and nuclear. Each of these options has their role: some of the energy sources are intermittent supply while others‚ such as nuclear and coal‚ are base-load supply."