Budget: We have heard your pleas, says Gordhan

A foray near the end of his speech best summed up his tone. "Puso e utlwa dillo tsa maAfrika Borwa! Ons het gehoor! Korrupsie moet gestop word! [We have heard you! Corruption must be stopped!] MaAfrika Borwa deserves better … We have heard your pleas!"

Gordhan has had to tread an incredibly fine line. He was to celebrate the achievements of the past 20 years. He was to laud the somewhat less effervescent accomplishments of the Zuma administration. He was to acknowledge the current pressing need for economic growth. Paradoxically, he was to simultaneously keep the purse strings tight. And most importantly, he was to let the voters know they had been heard. Their agitation was noted, and their government was not only hearing, but doing. 

"Fellow South Africans, let me be frank with you – the world economy is still in difficulty, and global institutions are struggling to find their way," he said. 

After describing the "immense strides" made by the government since 1994, he said: "Yet we still have an immense set of tasks and challenges facing us. We cannot just muddle through the next decade." 

Huge task
So what is the solution for a minister tasked with revitalising economic growth, while actually decreasing government expenditure from 33.2% of the gross domestic product (GDP) to 33%?    

"The emphasis … falls on ensuring that expenditure is allocated efficiently, enhancing management, cutting waste and eliminating corruption," said Gordhan. 

In so doing, he would not only save costs, but appease an electorate disillusioned with ongoing corruption and at least R33-billion of misspent government funds last year. 

The minister outlined four key ways in which this was to be done: 

• Spending reviews, already underway by the national treasury and the department of performance monitoring and evaluation, are examining "programme performance and value-for-money";
• The office of the auditor general has undertaken 27 forensic reviews over the past year, "leading to both criminal investigations and internal disciplinary action";
• In an effort to combat waste, cost-containment instructions were issued in January. "Budgets for consultants, travel, accommodation and venue hire have been curtailed," he said; and
• Regulations in the pipeline will entail stiffer reporting requirements for expenditure, revenue, borrowing and performance, overseen by the national treasury. 

Procurement reforms will also be put in place to combat irregularities and corruption with the allocation of tenders and leases. They will aim to address problems like accommodation that is being paid for by government and not occupied, and unsubstantiated payments to landlords. It remains to be seen how quickly these measures will be rolled out as whether they will have any effect in the short and medium term. 

Government spending halted, 'growth' prioritised
Following in the footsteps of other financial institutions, the treasury has reviewed its forecasted growth for this year's GDP down to 2.7%. 

The proposed budget relies on a revenue of R1.099-trillion, which is slightly higher than was projected at the medium term budget policy statement in October. Nevertheless, it drops from last year's 29.2% of GDP to a flat 29%. Government's overall projected expenditure will be R1.25-trillion, meaning that expenditure as a percentage of GDP will drop along with revenue. The budget deficit will dip to R153-billion; maintaining last year's ratio at 4% of the GDP. This is expected to ease to 3.6% by next year, and to 2.8% by 2016/17. Net debt is also expected to stabilise at 45% of the GDP in the medium term. 

According to the budget review, annual real growth in non-interest spending will average 1.9% over the next three years. 

But of course, the growth-centric National Development Plan will form a platform for resource allocation over the medium term, says the budget review.  

While Gordhan outlined measures intended to promote growth, these were all intended for the medium term as opposed to the immediate financial year. Highlights included: 

• The allocation of R3.6-billion to much-discussed "special economic zones", aimed at promoting value-added exports;  
• R7-billion to be spent on conditional grants to small farmers in a new agricultural policy action plan;
• Manufacturing development incentives will be allocated R10.3-billion over the next three years; and
• Treats for the voters: tax breaks and grants.

While keeping the two-pronged rhetoric of lower government spending and economic growth alive, Gordhan also handed out a few treats where the voters were most likely to appreciate it.  

Income tax thresholds were to be increased, meaning an overall R9.3-billion tax break for households. Similar relief was proposed for small businesses and entrepreneurs.

We ran Finance Minister Pravin Gordhan's Budget speech through a word cloud generator to find out which words were most prominent this year.