All set for Gordhan's maiden address

Wednesday, February 17, 2010

Pretoria - All eyes will be on Finance Minister Pravin Gordhan today when he delivers his maiden Budget Speech amid circumstances dictated to by an unfavourable economic climate.

The annual Budget Speech is a roadmap indicating what aspects of life in South Africa the government has prioritised in terms of financial resources.

Speaking to BuaNews ahead of Gordhan's address Standard Bank senior economist Dr Johan Botha said that there could be a possible R70 to 80 billion revenue shortfall.

"This will impact on the deficit. We expect the deficit to come in at 7.2 percent of the Gross Domestic Product (GDP)," he said.

In his Medium Term Budget Policy Statement (MTBPS) in October, Gordhan said he expected the country's budget deficit would come up to 7.6 percent of GDP.

On whether taxes would be raised, Botha said this was likely to happen since the economy has shown a fair amount of growth in the fourth quarter.

"On the expenditure side it is going to be interesting to see if there is a possibility of some belt tightening," he said.

Botha said the minister will also emphasise increasing the public sector's performance while he may also touch on the Rand.

"He may touch on the Rand but we really do not expect much of a change, the Rand is quite volatile," he said, adding that the fixing of the Rand could push up inflation.

This year marks a decade since inflation targeting was introduced in the 2000 national budget and Botha said that the minister could talk to inflation targeting.

"There is a possibility that they may widen the target range [of between 3 and 6 percent]. It could be widened to between 4 and 7 percent," said Botha. -

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