Tag: Pravin Gordhan

South African finance minister warns on weak currency, declining taxes

Pravin Gordhan
Pravin Gordhan

The revenue outlook could dim even more if markets react adversely to an awaited announcement by the US Federal Reserve, Finance Minister Pravin Gordhan warned on Tuesday.

“In respect of the revenue outlook in relation to the current economic growth that we are experiencing,… we are today facing more difficulties than anticipated.

“[This is] partly because of the very uncertain and volatile environment that we are experiencing globally, which could become worse when the chairman of the Federal Reserve of the US addresses us,” Gordhan told the National Assembly during debate on the 2013 Appropriation Bill.

Federal Reserve chairman Ben Bernanke is expected to indicate on Wednesday whether the US central bank will taper off its massive quantitative easing programme, which was designed to boost the recovery of the US economy.

“It is likely that if the markets don’t like what he is saying, or interpret what he is saying in a particular way, that could introduce shockwaves very similar to what we experienced about two weeks ago in the financial markets around the world, so prepare ourselves for that.

“All these uncertainties actually introduce uncertainty around the revenue picture,” Gordhan said.

Two weeks ago, the rand fell to a four-year low against the dollar. The US currency has strengthened in recent weeks, raising expectations that the Federal Reserve might start retreating from its bond-buying stimulus programme.

The bill putting into effect Gordhan’s R1.1 trillion 2013 budget was passed after often acrimonious debate, with opposition parties criticising the performance of one department after another and refusing to support the budget allocations for many.

Rising on the finance ministry’s budget, Democratic Alliance finance spokesman Tim Harris said it was not legitimate to blame the volatility of the rand and South Africa’s bleak growth outlook on quantitative easing.

Harris said the DA would vote for the department’s budget this year, but threatened not to do so in future if Gordhan were to bow to pressure from the ANC’s left-wing allies on fiscal policy.

Gordhan dismissed the criticism on finance policy as electioneering.

“As we get closer to elections, the temptation for fabrication becomes quite strong,” he said.

“The ANC, for the past 19 years, has led this country extremely well in terms of the fiscal management of this country…. There is no piece of fact that anybody can produce anywhere in South Africa that can accuse the ANC of being profligate, of being irresponsible, of not responding timeously to the events around us.

“We can’t be subjecting our public to the DA model of neo-liberalism and laissez-faire, which they want to cast upon South Africa.”

All opposition parties refused to support the presidency budget, in effect turning this vote into one of no confidence in President Jacob Zuma, with DA parliamentary leader Lindiwe Mazibuko saying South Africa could not afford another term of “leadership failure”.

Congress of the People leader Mosiuoa Lekota said he would not vote for the state security budget in protest against the Protection of State Information Bill which is awaiting the president’s signature.

Lekota said former president Nelson Mandela would never have signed the bill because it was a setback for freedom of speech. – Sapa

South Africa to return Gaddafi billions to new Libyan government

Muammar Gaddafi

An agreement has been reached on the repatriation of Libyan funds and assets from South Africa, the Treasury said on Thursday.

“The Minister of Finance, Pravin Gordhan, has agreed with the Libyan government that the repatriation from South Africa of Libyan funds and assets will be handled in terms of United Nations (UN) protocols,” it said in a statement.

The agreement was reached at a meeting between Gordhan and a Libyan government delegation on June 4. The Libyan delegation was led by Usama al Abid, the Minister in the Office of the Libyan prime minister.

“The decision was informed by the fact that the government of Libya established a single body in 2012 to co-ordinate the repatriation of assets to Libya,” Treasury said.

This body co-operated with the committee formed in terms of the UN Security Council Resolution 1970 (2011) and the panel of experts which co-ordinated repatriation to Libya of assets frozen in various countries.

In particular, the panel identified and monitored hidden assets of the Libya Investment Authority, the Libya Africa Investment Portfolio and the Libya Africa Investment Company, as well as the assets of individuals listed under the relevant UN Security Council resolutions. – Sapa

South African finance minister says unrest damaging the economy

Labour unrest in the mining industry was extremely damaging to the economy, Finance Minister Pravin Gordhan said on Friday.

“It undermines confidence in the South African economy, and if we undermine confidence, we undermine investment,” he told reporters at a press conference in Pretoria. – Sapa

Zimbabwe wants to borrow billions of rand from South Africa

When Zimbabwe nationalised land and evicted whites from the country, hyperinflation ensued. Now it wants to borrow from its neighbour where white taxpayers fund the state.

Zimbabwe will seek funds from southern Africa to help finance its budget as the country battles effects of a nearly decade-long downturn, Finance Minister Tendai Biti said Thursday.

“I am appealing to our colleagues in the SADC (Southern African Development Community) countries,” Biti said in an address on the state of the economy.

“I have secured an appointment two weeks from today, with South African Finance Minister Pravin Gordhan where we are going to ask for budgetary support to the tune of $100 million.

“Another thing we are doing is appealing to our friends in SADC. We are also in discussions with the Angolans for a $50-million credit facility.”

Zimbabwe’s powerhouse neighbour South Africa, the continent’s largest economy, will also be asked to make good on a line of credit promised in 2009 to the tune of 500 million rand ($60.4-million, 47.8-million euros), he said.

Biti said although the economy was stable since the hyperinflation-crippled local dollar was dropped in favour of foreign currencies, money was short in both the government and the private sector.

“I regret to announce that the economy still remains depressed with funding challenges for both private and public sectors, irrespective of the prevailing stable macroeconomic environment and some output improvements in sectors such as mining,” said Biti who in July cut the year’s growth forecast from to 5.6 percent from 9.4 percent.

He blamed low economic performance on lack of money to fund productive projects, low foreign investment, high unemployment, a high debt overhang and uncertainty and delays over the constitution-making process.

Zimbabwe’s economy has shown signs of recovery since veteran President Robert Mugabe and long-time rival Prime Minister Morgan Tsvangirai formed a unity government after 2008 poll chaos.

Biti said revenue collections were still falling short with $257.4 million collected in July against a $271.2 million target and $269.2 million in August against a target of $280.7 million.

The gold-mining sector was on course to attain the annual target of 15,000 kilogrammes, while inflation was on the slide due to the depreciation of the South African rand against the dollar.

He said payments for imports rose by 30 percent from the same period last year to reach $5.1 billion. – Sapa

South Africa’s ‘culture of greed and corruption’ – Finance Minister Gordhan

Pravin Gordhan

South Africans need to work together to prevent the country from giving in to a culture of greed and corruption, Finance Minister Pravin Gordhan said on Thursday.

“Let me tell you that from where I stand and what I see, this [corruption] is a disease that a hospital or health system cannot solve,” he said at the Discovery Invest Leadership Summit in Johannesburg.

The millions of honest people in the country needed to have their voices heard.

Gordhan said the country’s leadership and its people had to fight the underlying factors that influenced corruption, such as greed and selfishness.

“If we don’t do that we give in to culture that says ‘I want everything now. I want to be a millionaire now… I want the best car even if I can’t afford it’. We are creating a wrong type of culture.”

South African leaders, whether they came from politics and business, needed to be humble, Gordhan said.

“In South Africa we have too many pretenders, who say one thing in public, but do other things in private.”

The country needed to be careful about “over-hyping” the ANC’s national conference in Mangaung at the end of the year.

“Mangaung will come… We must be careful not to over-hype what are normal political contests in any society around the globe,” Gordhan said.

“It will have its own South African character, it will have its own South African noises, but at the end of the day it is a political contest. That’s what democracy is about.”

South African leaders needed to talk more instead of “shouting at each other in the public space”.

Gordhan said the country needed greater economic and political inclusivity.

“Unless the world and South Africa find a solution to economic inclusivity, combined with really serious and deep political inclusivity, we will have serious faultlines.

“Nations will fail if they have non-inclusive economic and political institutions.”

He said the lack of development for small companies and businesses was a problem that needed to be rectified.

At the beginning of his address, Gordhan called for a moment of silence for the 34 Lonmin mineworkers shot dead during a clash with police in the North West on August 16. – Sapa