MTBPS "well balanced"- economist

Tuesday, October 27, 2009

Pretoria - Finance Minister Pravin Gordhan has delivered a well balanced Medium Term Budget Policy Statement (MTBPS), says Senior Economist at Investment Solutions, Chris Hart.

Commenting on Gordhan's maiden MTBPS tabled in Parliament today, Hart said Gordhan had managed a balancing act, considering the current economic climate.

"I was quite pleased; it was level headed and sensible given the circumstances. It also recognised the problems we have," Hart told BuaNews.

However, Hart said it was concerning to note that that government was considering raising taxes.

"That is of concern," he said, adding that cutting back on unnecessary expenditure is the right way to go.

Minister Gordhan said the country's budget deficit would come up to 7.6 percent of Gross Domestic Product (GDP). Economists had predicted that this would come in between 7 and 8 percent.

Gordhan further added that there would be further relaxation of exchange controls in a bid to reduce the cost of doing business in the country and attract more foreign investment.

Commenting on this Hart said: "This is quite positive, as it reflects a strong vote of confidence in the country."

The MTBPS also showed that there will be no extra funds allocated to power parastatal Eskom. Hart said the solution to the parastatal's cash requirements lay in government allowing the private sector into the industry.