Editorial: Unconvincing rescue effort

CONSIDERING the ramifications of President Jacob Zuma’s finance portfolio bombshell of little more than two months ago, there will be relief as Pravin Gordhan sought to steady the ship and present a give-and-take budget that showed all the hallmarks of an election year.

But a serious question remains over whether yesterday’s announcements will bring us back from the fiscal brink, given what is a lessthan-convincing game plan.

Returning to deliver a speech he could not have imagined doing prior to December 9, the finance minister may have surprised some by not raising income or value-added tax – opting to fill state coffers from user-based taxes instead – but it must be remembered that local government elections are just months away.

So Gordhan – with ill-concealed sleight of hand – succeeded in finding money where it does not necessarily appear to impact heavily on the man or woman in the street, while at the same time plugging holes resulting from lower revenue collection.

A freeze on public sector employment and hikes in levies and taxes – from fuel to plastic bags – coupled with the introduction of a tyre levy and sugar-sweetened beverage tax are just some of the less painful ways Gordhan will fill the public purse.

But biting the bullet will undoubtedly come later – the next three years, in fact – with government aiming to reduce the budget deficit at a much quicker pace from next year through expenditure reductions and tax increases.

The minister, having such a short time to pull it all together, aimed to deliver a budget that would avoid a ratings downgrade for South Africa and get the country out of troubled fiscal waters.

But for the moment, the jury remains out as to whether this rescue effort can do the job.