Budget speech arguably Gordhan’s most important ever

With South Africa’s sovereign credit rating on the cusp of a downgrade to below investment grade‚ this week’s Budget speech by Finance Minister Pravin Gordhan will arguably be the most important he will deliver.

That’s the view of FNB economist Mamello Matikinca and the bank’s senior industry analyst‚ Jason Muscat.

They say that rating agencies will be looking for unwavering commitment to reducing fiscal imbalances through a mix of raising revenue while capping expenditure

and national debt growth.

 “Hints of imminent structural reform and at least part-privatisation of non-core state assets would go a long way in keeping a mid-year downgrade at bay‚” they add.

They note that data released this week was a clear indication of the difficult times

ahead.

 “Indeed the rise in inflation was worse than anticipated and is supportive of a hawkish stance by the central bank when they meet again next month. At the headline level‚ retail sales figures looked impressive‚ but the current environment remains unsupportive of notable growth in consumer spending‚” they state.