‘Can we be
a winning
nation?’
Finance Minister Pravin Gordhan crafted the 2013/14 fiscal budget
against the backdrop of a tough macro-economic environment,
spiralling unemployment and a worrying budget deficit.
A
ccording to Gordhan, South Africa’s gross domestic
product (GDP) growth this year is expected to be
2.7% compared to the 3% the National Treasury
estimated in October (2012), rising to 3.8% in
2015 against earlier predictions of a 4.1% growth.
This compares with GDP growth rates of over 6% to 10% in some
countries in sub-Saharan Africa, even though the growth is off
a lower base than that of South Africa, the region’s largest economy
by output.
On the other hand, the Minister had to send the right message
to investors and rating agencies who are still concerned about the
downside risks to the economy as a result of labour unrest, the fiscal
deficit and tepid economic growth.
Gordhan did not disappoint, neither did the budget shoot the
lights out of the sky, even though the most noticeable relief was his
decision not to increase personal income tax.
In the end, economists, bankers and opposition parliamentarians
appeared impressed that Gordhan had managed to produce
a balanced budget that could lay the foundation for sustained
economic growth.
Dr Azar Jammine, Director and Chief Economist at Econometrix,
a research and analysis organisation states: ‘It is a well-known cliché
to suggest that (Gordhan) had very little room to manoeuvre in
drawing up the budget. Economic growth over the past year as well
as prospects for the coming year have turned out to be weaker than
budgeted for a year ago.’
Banker Sim Tshabalala, who is Joint Group CEO of the Standard
Bank Group describes the budget as pro-business, singling out the
raft of tax incentives that he says will encourage more cross-border
investments by companies, including banks.
South Africa’s big four banks are among the most aggressive in
pursuing organic and acquisitive growth in sub-Saharan Africa,
where Standard [Bank] is the largest by assets and income. Retailers
and miners are also jockeying for market share in growth markets
in east and west Africa.
‘We think the pro-business tone of the budget will be welcomed
by banks and by all South African businesses,’ says Tshabalala. ‘To
quote Minister Gordhan, “Growing the economy means expanding
business activity.” However, as the Minister also says, this means
that the private sector has serious responsibilities to improve our
competitiveness and to expand trade, investment and job creation.
South Africa’s banks will continue to work hard to embody and
support South African competitiveness,’ says Tshabalala.
Analysts, however, warn it will not be easy, given the expected
drop in revenue collection, low economic output and the impact of
the tepid global output on South African economy.
Edition 5
BANKER SA
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