Mini Budget Interesting. For All The Wrong Reasons

Rarely has there been a budget event where the budget itself was such a side issue.   Admittedly, today’s mid-term budget review has none of meat of the February budget itself, where idiot accountants salivate over changes to what they call ‘sin taxes’ – those evil levies on booze and ciggies, soon to be joined by a sour assault on sinful sugar as well.

However, Finance Minister Pravin Gordhan did have a lot to say about the economic climate, where the growth trend has slipped from around 4% a year to 2% – and will reach just 0.5% this year.   The result is that spending will need to be trimmed, revenue will fall from projected levels, and debt will rise even faster. Not to mention some more tax hikes.   Which he alluded to, but did not spell out.

Unusually, Pravin was joined at his budget news conference by the minister in the Presidency and the higher education minister, as the three agonised in harmony about the current plight of our students. All promised lots of action and sympathy (though not for the rioters) but clearly there is not the extra cash for everything the students are demanding. This is going to be a big political juggling act, as there is this big gap between the aspirations of the students and the ability of the State (we taxpayers) to fund them.    Nonetheless a few multi-billion figures were sloshing around, which should pay for plenty of petrol bombs, booze and drug orgies, and whatever else today’s students list as necessities.   There may even be more lectures, assuming that not all the lecture halls are burnt down, along with libraries and other symbols of capitalist oppression.

The non-education elephant in the room is, of course, the now open row within different factions of the ANC, with the Finance Minister himself facing criminal charges related to his time as SA’s top taxman. He made it to mini-budget day; whether he will make big budget day in February is anybody’s guess. He certainly did not hide his concerns about the general environment, although he insisted it is not preventing him and his loyal officials (I assume some of them must be loyal) from doing their jobs.

Oh, I nearly forgot the third elephant in the room – which is, of course, the ratings agencies. SA is in danger of a downgrading to junk status, which will not only hit investor confidence, but is also likely to push up the cost of existing debt.

Pravin tried hard to sound confident (hampered by a cold) and in charge (hampered by all the knives being plunged his back).   We should know soon enough whether he won much admiration on the ratings front.

As with the assassination of Lincon, details of the mini-budget may be forgotten by history amid all the wider whirlwinds on the larger political and economic stage.

The budget detail will matter, and most of that will come in February.   I wonder what odds the bookmakers are giving on Pravin delivering that speech?

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