Gordhan under pressure to fulfil election promises

Tuesday will be the first opportunity for the government under president Jacob Zuma to put its money where its mouth is when Finance Minister Pravin Gordhan presents the medium-term budget in Parliament.

Gordhan is under pressure to show that despite the lack of revenue brought about by the global financial crisis, the Zuma government will still be able to fulfill its election promises.

This budget will also for the first time show if new departments — like the Department of Economic Development and the Department of Women, Children and People with Disabilities — were merely instituted to appease certain interest groups or whether the government takes these new departments seriously.

During his election campaign Zuma was lobbied by Cosatu to establish a ministry in which economic planning could take place to ensure that economic policy is not only in the hands of Treasury.

Gordhan is also expected to pronounce on the debate raging in government about where the primary responsibility for economic policy lies.

Although the Public Management Finance Act (PFMA) states that the Treasury is responsible for all fiscal policy, Economic Development Minister Ebrahim Patel has weighed in on the debate, saying he is responsible for economic planning.

Attempts by Zuma to clear the air around the issue by reshuffling the Cabinet clusters has resulted in even more confusion.

Gordhan is expected to tell South Africans that due to the revenue shortfall, government expenditure will be closely watched. He is also expected to declare a further budget deficit, with some analysts predicting the deficit will approach 8%, which is universally seen as the limit for middle-sized economies. Deficits of more than 8% set off alarm bells because it casts doubt over whether the country will be able to service its debt sufficiently.

In his last budget speech former finance minister Trevor Manuel announced a deficit of 3%.

Gordhan was urged on Monday by opposition parties to focus expenditure on building infrastructure that will create jobs, but not increase taxes.

The Congress of the People (Cope) and the Democratic Alliance jointly asked Gordhan to cut wasteful expenditure and introduce strict austerity measures.

An audit of the necessity of state-owned enterprises (SOEs) was also called for, as opposition parties believe they are a drain on state revenue.

They also asked for a freeze on public-service vacancies, except those which are required to improve service delivery.

Budget roll-overs should only be allowed when it is linked to the provision of service-delivery infrastructure, Cope and DA said in a joint statement.

Gordhan is expected to start his speech at 2pm.

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Mandy Rossouw
Guest Author

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