Business lauds Gordhan's fiscal sustainability

Thursday, February 18, 2010

Pretoria - Business and economists have welcomed Finance Minister Pravin Gordhan's Budget Speech as South Africa slowly makes its way out of a recession.

Nedbank welcomed Gordhan's budget as setting the fiscus on the right path.

"The 2010/2011 budget plots the course back to fiscal sustainability without sacrificing important government programmes and derailing economic recovery.

"It also provides policy stability during a period of international and local uncertainty and is therefore no surprise that it was welcomed by the currency, bond and equity markets," said Nedbank.

Gordhan's speech on Wednesday was preceded by speculation that the Reserve Bank's inflation targeting of 3 to 6 percent might be changed and that the volatile Rand would be fixed.

However, Gordhan confirmed that the existing inflation targeting framework would remain as is. The minister said government was not in a position to fix the Rand.

The Human Sciences Research Council (HSRC) said much of the Budget was similar to October's Medium Term Budget Policy Statement (MTBPS).

Dr Miriam Altman, the head of HSRC's Centre for Poverty, Unemployment and Growth told BuaNews: "It was similar to the MTBPS; even the deficit was similar. It was not much of a surprise which is a good thing."

Altman also welcomed the initiative to get more young people employed through the wage subsidy which will cater for 800 000 qualifying youths.

"However I would have liked to see more attention given to giving young people employment in the public service as well.

"I would have also liked to see an item on the budget dedicated to the strengthening of the monitoring and evaluation arm of government relating to how they monitor as well as quality spending," she said.

Business Against Crime South Africa (BACSA) welcomed the measures to combat corruption and fraud regarding government tenders.

"The Treasury is commended for putting in place measures which will combat fraud and corruption in relation to tender and procurement processes.

"Greater efficiency in public spending will assist to prevent wastage, so that tax-payers' money can be directed towards government's identified priorities, including crime," said BACSA CEO, Dr Graham Wright.

"The continued prioritisation of crime as reflected by the budget allocations for the Public Order and Safety Departments in the order of R85.6 billion is welcomed by BACSA.

"The identified targets for the police and the judicial processes, as well as the plans to strengthen the capacity of the Hawks is both needed and welcomed," Wright said.

The South African Chamber of Commerce and Industry (SACCI) described the budget as showing discipline and presenting a longer term economic vision for the country.

It also welcomed additional allocations for education and skills development. In addition to government's allocation of R165 billion on education, the Department of Basic Education will receive R2.7 billion more for workbooks.

"In addition to the provision of equipment and books, SACCI would encourage the use of some of the funds for the improvement of teaching skills and for the re-opening of teacher training colleges," SACCI said.

The business body said it would have liked to see more details on how crime and corruption would be addressed. It also expressed concern about the 25c a litre increase in the fuel tax.