Publications
Partners
Cape Town - The government is actively destroying R100bn to R150bn a year of capital through the current fiscal deficit and state lending, Efficient Group chief economist Dawie Roodt said on the eve of Wednesday's mini budget to be presented to parliament by Finance Minister Pravin Gordhan.
Roodt spoke at a Cape Town Press Club lunch in Mowbray and said South Africa is consuming too much and saving too little.
“Gordhan is in a difficult position because of low economic growth. But you can’t produce more and grow faster if you consume too much and invest too little. And you can't invest more if you don’t save more.
“Companies are the only ones saving a little bit in SA today. Households are in a difficult position and on a zero savings rate – at least they are not dissaving, in other words living on their saving. Government is the big dissaver and by just spending less, the government can push up the savings rate considerably,” Roodt said.
But Roodt does not expect too much on this front from Gordhan. “He is more of a technocrat and I suspect he has less political influence than Trevor Manuel had in his days as minister of finance. Therefore selling some necessary but unpopular steps will be difficult in an election year”.
Roodt expects economic growth of just 1.9% this year compared to Gordhan’s prediction of 2.7% in the February budge. The Reserve Bank and the IMF both expect growth of just over 2% this year.
Roodt said the obvious place the government could start reining in expenditure would be the government wage bill. But that wil be politically very difficult.
On Gordhan giving more clarity on an alignment of the governments’ national development plan with the budget, Roodt said nobody really knows what SA’s macro economic strategy really is because there’s often a big difference between what is said and what is implemented by government.
“We lack political leadership.”
-Fin24
*Jaco Leuvennink is Fin24's budget correspondent. Views expressed are his own.
Roodt spoke at a Cape Town Press Club lunch in Mowbray and said South Africa is consuming too much and saving too little.
“Gordhan is in a difficult position because of low economic growth. But you can’t produce more and grow faster if you consume too much and invest too little. And you can't invest more if you don’t save more.
“Companies are the only ones saving a little bit in SA today. Households are in a difficult position and on a zero savings rate – at least they are not dissaving, in other words living on their saving. Government is the big dissaver and by just spending less, the government can push up the savings rate considerably,” Roodt said.
But Roodt does not expect too much on this front from Gordhan. “He is more of a technocrat and I suspect he has less political influence than Trevor Manuel had in his days as minister of finance. Therefore selling some necessary but unpopular steps will be difficult in an election year”.
Roodt expects economic growth of just 1.9% this year compared to Gordhan’s prediction of 2.7% in the February budge. The Reserve Bank and the IMF both expect growth of just over 2% this year.
Roodt said the obvious place the government could start reining in expenditure would be the government wage bill. But that wil be politically very difficult.
On Gordhan giving more clarity on an alignment of the governments’ national development plan with the budget, Roodt said nobody really knows what SA’s macro economic strategy really is because there’s often a big difference between what is said and what is implemented by government.
“We lack political leadership.”
-Fin24
*Jaco Leuvennink is Fin24's budget correspondent. Views expressed are his own.
