Budget a tough balancing act for at-risk Gordhan

Finance Minister Pravin Gordhan
Finance Minister Pravin Gordhan

In what could be his last budget speech today, a politically vulnerable Pravin Gordhan is expected to strike a balancing act while fending off attacks from some of his colleagues.

Gordhan is facing an uncertain future going into this year’s budget, which has been preceded by calls for his removal from certain quarters in the ANC.

The finance minister has, over the past few years, delivered austerity budgets and announced several cost containments as South Africa grapples with a sluggish economy with little or no growth.

Tax increases are on the cards as the government looks to increase its revenue base.

But Gordhan again finds himself in an awkward position, following the Nhlanhla Nene and Des van Rooyen reshuffle scandal just before last year’s budget.

Rumours of his pending axing to make way for former Eskom chief executive Brian Molefe also refuse to go away.

Gordhan’s budget also comes as he takes on the Gupta family’s Oakbay Investments in court.

Political analyst Ralph Mathekga said what Gordhan was facing was unprecedented for a finance minister.

“He’s vulnerable in two ways,” Mathekga said.

“The first is how credible is his budget to be – is it the type of budget you think will form part of policy?

“But what has been happening is a lot of ministers have actually started challenging the budget, ministers saying disparaging things about the Treasury. This has never happened.”

He said when ministers had a problem with the budget they would normally refer it to a budget committee and raise it internally.

“It is quite unprecedented to hear the likes of Lindiwe Zulu saying the allocation to her department is not good, is a stumbling block in dealing with job creation.

“Number two is a simple question of the possible removal of Pravin.

“You can imagine when you’re supposed to prepare a budget, but you hear all sorts of noise that this might be your last week,” Mathekga said.

He said Gordhan did not seem to have political protection from the head of cabinet and other line ministers.

It was also not fair to link Gordhan to white monopoly capital.

“It’s part of the PR campaign,” Mathekga said.

“I suppose he has the share [in companies] like anybody else.

“So the aim is to present him as a 50% shareholder in British American Tobacco. It’s unrealistic.

“Remember the whole purpose is to delegitimise.”

He said ANC chief whip Jackson Mthembu had been working very hard to distance himself from President Jacob Zuma.

Mthembu is the only ANC MP to come to Gordhan’s defence this week, tweeting that “he is a capable minister worthy of the position he holds”.

Economist Mike Schussler said that from the outside Gordhan seemed very vulnerable.

“I think it’s a tremendous story this,” Schussler said.

“A person who’s asking South Africans to pay more taxes and to believe that things are going to get better, in a situation he may not be around for much longer.

“South Africans feel in a way ‘what use are my taxes, I don’t see smaller class sizes, I don’t see better hospitals’ and the like.”

He said that in light of possible tax increases, people were under tremendous pressure.

He agreed that the perceived lack of support for Gordhan did not bode well for the economy.

“Our economy is under tremendous pressure.

“We’ve had luck with the rain and a bit higher commodity prices.

“But longer term is not very good from most institutions. The forecast for South Africa is that the economy is not going to grow at a rate that other countries are growing at, with its high unemployment rate,” Schussler said.

The head of parliament’s budget office, Professor Mohamed Jahed, said the budget would reflect the state of the nation address’s focus on radical socioeconomic transformation, as well as other priorities such as the nine-point plan, the national development plan, energy, security, investment and social issues like the development of the youth and women.

He said the “fixation will be on the R28-billion [in additional tax revenue] we need to collect going forward”.

Tax revenue collection last year had also been 2% lower than the Treasury had originally anticipated, creating a R23-billion shortfall.

Jahed said South Africa’s growing debt servicing costs, which stood at around R148-billion in October, would be a priority in Gordhan’s budget.

He said the possibility of an increase in VAT as a way to quickly raise revenue had been on the cards for a number of years, although Gordhan had repeatedly indicated that he would not balance his budget on the backs of the poor.

The parliamentary budget office’s Dumisani Jantjies told parliament yesterday that an increase in VAT of just 1% would create additional revenue of about R10-billion.

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