An overall positive budget review
This morning, FOCUS attended the 2017 budget review, hosted by Econometrix and Grant Thornton, where the overall feeling was that Finance Minister Pravin Gordhan seems to have done a pretty good job, despite political pressure and the continued threat of a downgrade posed by the ratings agencies.
Azar Jamine, CEO and chief economist at Econometrix, was upbeat that, for the first time in several years, treasury was not obliged to reduce its economic growth forecast. He was also upbeat about the fact that return on equity of state-owned enterprises (SOEs) turned positive in 2016, and the ratio of liabilities to assets in the SOEs is decreasing.
Encouragingly, says Jamine, government has succeeded in sustaining the downward trend in its budget-deficit ratio to the gross domestic product. “For first time in six years, tax revenue will overtake non-interest expenditure – we’re no longer chasing after our own tails,” he notes.
“Don’t get totally hung up on this budget alone, the other important driver that should not be underestimated is the global economy. There is an incredible correlation between that and South Africa’s economic growth rate; both are projected to improve over the next few years.
“We must be grateful that we (currently) have a treasury that is holding the fort and be confident that the economy is not going down the tubes. In the short term, there will be at least some marginal improvement,” he concludes.
Look out for the March issue of FOCUS for our full report!