Booze, smokes, tyres, fuel and cold drinks in 2016 budget

Briefing Parliament’s finance committees this afternoon, Gordhan took a swipe at the Democratic Alliance, which has criticised the budget as not going far enough to stop South Africa from following the same route.

In the end, the minister did not have enough political clout to deliver on economic growth and state owned enterprises.

Traders said most trading in the session would likely come after the budget as the country and certainly foreign investors eagerly await Gordhan’s proposals on how he is going to try and fix the fiscal situation in the country.

National turnaround planDuring the State of the Nation Address earlier this month, President Jacob Zuma, said that part of the National turnaround plan, and touching on last year’s Nine Point Plan, was to seek viable resolutions to the current energy challenge.

Personal income tax rates were not increased as was expected and as Nhlanhla Nene did previous year, although about R18 billion more will be collected in 2016/17. “The issues that we have raised are quite important ones.It is quite crucial for us to make sure that the state-owned companies within my domain and broader in the rest of government works”, Brown said. The government will also implement tax hikes on alcohol, property, and fuel that will bring in an estimated $1.8 billion. “By working together we can increase growth, broaden participation and inspire confidence in our economy and society”, said the Minister.

Despite weaker growth, the government would still aim to reduce its budget deficit to 3.2 percent of GDP in the next fiscal year from 3.9 percent in the 2015/16 period by tightening spending, he said.

He stressed that the country can not spend what it can not afford.

The budget needs to set out “concrete plans to reassure local and foreign investors that South Africa is still a destination worthy of their investment”, said Eric Enslin, CEO of FNB Private Wealth and RMB Private Bank.

Minister Pravin Gordhan is faced with the hard balancing act of trying to please both the financial world and a government facing voters in municipal elections this year.

He denied in his press conference that he was presenting an “austerity budget”, saying that spending cuts would be made without affecting social services. After the disastrous installation of an unknown parliamentarian, Mr. Zuma backtracked and reinstalled Mr. Gordhan in a post he held from 2009-2014.

“Net national debt is projected to stabilise at 46.2 percent of GDP in 2017/18, and to decline after that”.

The mining industry, hit hard by slowing demand from China, is shedding jobs by the thousand while the worst drought in a century has forced Africa’s top grain producer to import maize.