“However, Gordhan’s newfound position of power after his reappointment as minister of finance late past year could mean that he has the means to persuade government on this”, he said.
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But privatisation would face strong resistance from within the ruling African National Congress.
“It will be a market-friendly budget, but the minister is very limited in terms of spending”, Thabi Leoka, an economic strategist at Argon Asset Management, said by phone from Johannesburg.
Eskom was expected to receive a 23 billion rand cash injection from the government, but Gordhan said Treasury had delayed giving the power utility the remainder of 2 billion rand until it complies with equity allocation conditions, such as cost cuts and improving maintenance.
Read also: Gordhan on SAA: Targets state-independency.
“We can not spend money we do not have”. Last December, President Jacob Zuma shocked the business community by replacing the well-respected finance minister Nhlanhla Nene with an ally and backbencher David Van Rooyen.
“We can address declining confidence by working together as a united nation, black and white”.
The minister is faced with the tough task of trying to please the financial world and solve the country’s economic issues.
He denied in his press conference that he was presenting an “austerity budget”, saying that spending cuts would be made without affecting social services.
Gordhan announced an extra 16 billion rand ($1.05 billion) for higher education, saying “we are crafting solutions to the voices of students regarding fees and housing”.
“Net national debt is projected to stabilise at 46.2 percent of GDP in 2017/18, and to decline after that”.
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A 1 percentage-point increase in Value-Added Tax could raise a much as 15 billion rand a year in additional income, according to BNP Paribas Securities South Africa. Although the country is rich in mineral resources it has been hit hard by falling commodity prices globally and its farmers have been hit by the worst drought in more than a century.
