Martedì, 23 Febbraio 2016 14:39

Fin24.com | LIVE: Rand dives despite budget praise

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Dane McDonald and Carin Smith
2016-02-24 12:53

Dane McDonald and Carin Smith

Finance Minister Pravin Gordhan has taken to the podium in Parliament to deliver his 2016 budget

speech.
LIVE NEWS FEED

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Last Updated at 14:44
14:43
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Ian Wason, CEO DebtBusters: An increase in Income Tax was expected. We are relieved that the Minister did not increase the top tax rate, but remain concerned that middle income earners are being squeezed too hard. Our analysis has shown that it is the thirtysomething middle upper income earning consumers who are increasing their debt the most in the current environment. They are the most vulnerable of all consumers at this time.

14:42
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Gordhan tells the house that they may clap for the tender portal which will aid the fight against corruption.

14:42
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Gordhan: Restrictions on filling managerial and administrative vacancies, subject to review of human resource plans and elimination of unnecessary positions;

• Reduced transfers for operating budgets of public entities;

• Capital budgeting reforms to align plans with budget allocations while strengthening maintenance procedures;

• Mandatory use of the new e-tender portal, thereby enforcing procurement transparency and accessible reference prices for a wide range of goods and services;

• A national travel and accommodation policy and instructions on conference costs;

• New guidelines to limit the value of vehicle purchases for political office- bearers;

• Renegotiation of government leasing contracts;

• New centrally negotiated contracts for banking services, ICT infrastructure and services, health technology, school building and learner support materials.


14:41
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Chris Harmse from Rebalance Fund Managers: Maximum Effective Capital Gains taxes are increased from 13.7% to 16.4% for individuals and from 18.6% to 22.4% for companies. Wealth tax increased as expected.

14:41
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Gordhan: A consolidated revenue target of R1 324 billion is set for 2016/17, or 30.2 per cent of GDP. Expenditure will be R1 463 billion, leaving a budget deficit of R139 billion, or 3.2% of GDP. The deficit will decline to 2.4 per cent in 2018/19.

14:40
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Adam Phillips of Umkhulu Consulting: The Finance Minister has only been speaking for 20 minutes, but the ZAR has fallen 15 cents. There is a lot out on the wire, but I would say that it appears to be a bit of a 'wishy washy' budget and that is why they have put the boot in.

Maybe he will say something that will make the ZAR turn around, but I doubt it. There may be cuts in government spending, but he still wants to borrow a great deal from international debt markets. If we get a rating cut we will all feel more pain. There has been nothing that shows he has been 'ballsy'.


14:40
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The Budget Review states that South Africa is in the midst of its worst drought in at least two decades, threatening agricultural output and pushing up food prices.

14:39
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Gordhan: In last year’s Budget we projected total tax revenue of R1 081 billion. The revised estimate is R11.6 billion short of this total, but nonetheless about 8.5 per cent more than the 2014/15 outcome. This is a most commendable effort in the circumstances: all South Africans have contributed, and the 14 000 staff of the Revenue Service have done a sterling job.

14:39
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Gordhan: Now we come to the tough part: Fiscal consolidation. We cannot spend money we do not have. Until we can ignite growth and generate more revenue, we have to be tough on ourselves. Spending plans are reduced, a higher revenue target is set and net national debt is projected to stabilise at 46.2 per cent of GDP in 2017/18, and to decline after that.


14:38
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Government has proposed merging South African Airways with SA Express and partnering the new entity with a minority equity partner.

14:37
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Gordhan: Corporate investment and participation by trade union funds in infrastructure development needs appropriate policies and market structure frameworks, clarifying the roles and linkages between public and private sector service providers. Progress in these regulatory arrangements is the key to more rapid investment and more inclusive growth in these sectors.

14:37
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Thulani Gqirana of News24 from inside parliament: Members of Parliament listening attentively, behaving as the minister delivers his speech. No heckling, no interruptions.

14:37
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Smokers and drinkers will again be heavily taxed on these, what government calls, bad habits.

14:36
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Chris Harmse from Rebalance Fund Managers Tax threshold for elderly above 65 is increased from R104 611 to R114 800. And for above 75 from R117 111 to R128 500.

14:35
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Gordhan: The Land Bank has set aside a concessionary loan facility to assist farmers in recovering from the impact of the current drought conditions. Over the next three years R15 billion is allocated for land acquisition, farm improvements and expanding agro-processing opportunities.

14:35
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Gordhan: Our growth and development depends also on an expanding envelope of enterprise investment in industry, mining and mineral beneficiation, agriculture and agro-processing, housing, commercial development and tourism facilities. There are also initiatives in progress to reinforce financing of these projects.

14:33
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Gordhan: R62 billion is allocated for the housing subsidy programmes of Minister Sisulu’s department, and R34 billion for bulk infrastructure and residential services in metropolitan municipalities.

14:32
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Gordhan: Energy investment amounts to R70 billion this year and will be over R180 billion over the next three years, as construction of the Medupi, Kusile and Ingula power plants is completed.

14:32
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Gordhan: To finance the investment needed for sustainable growth, we have the institutional capacity to blend international and domestic savings, and to combine public and private sector financing to mitigate risk and reduce the cost of capital.

14:31
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Chris Harmse from Rebalance Fund Managers: Income tax at lowest level of 18% is extended from R165 600 or R13 800 per month to R181900 or R15 158.33 per month. Good news for low income salary earners.

14:31
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Gordhan: By removing constraints, supporting innovation, protecting jobs, diversifying our economy and exploring new opportunities, we can expand growth prospects.

14:31
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Gordhan: We particularly welcome the working groups that have been established and several practical proposals for joint action. These include a collaborative initiative to combat corruption and abuse of tender procedures, a new fund to accelerate small and medium enterprise development and measures to build investor confidence and contribute to social cohesion.

14:30
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Ian Wason, CEO DebtBusters: We are encouraged by the increased R16bn allocation to education over the next three years. Education has a direct impact on unemployment and economic growth. South Africans without work put government under more pressure every year for service delivery, as they are unable to afford day to day living expenses. More so, they put pressure on their families and often their children to work and support them instead of pursuing their own education and career goals.

14:29
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Gordhan: Minister Joemat-Pettersson is overseeing our renewable energy, coal and gas IPP programme, and preparatory work for investment in nuclear power.

14:29
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The funding of #NSFAS student aid is excellent. Outstrips inflation significantly. Cancels debt 8000 students. #feeshavefallen#Budget2016

— Ferial Haffajee (@ferialhaffajee) February 24, 2016

14:28
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Gordhan: Initiatives to transform ownership of land and improve productivity in agriculture are under way, and Ministers Zokwana and Nkwinti are addressing drought-related challenges in rural areas.

14:28
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Gordhan: Visa regulations have been revised following consultation between Ministers Gigaba and Hanekom and concerns raised by the tourism industry.

14:27
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Chris Harmse from Rebalance Fund Managers: An additional tax revenue of R18.1bn will be raised but no increase in marginal tax rates it stays on 41%. Good news. Primary rebate increased and bottom three income brackets adjusted by 1.8% and 3.4% . Good news for low income earners and salaries.

14:27
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Gordhan: (amid cheers) I need to emphasise that violent protest is not an acceptable way of articulating these challenges.

14:26
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Gordhan: These are the challenges we hear in South Africa today.

• We are responding to appeals from the business sector for greater certainty in respect of policies that affect investment decisions.

• We are engaging with proposals from organised labour for a minimum wage policy, and for progress on opportunities for young people.

• We are responding to action in communities where services are missing or badly managed.

• We are crafting solutions to the voices of students regarding fees and housing.


14:26
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Gordhan: We must be bold where there is need for structural change, innovation and doing things differently. We need agility and urgency in implementation.

14:25
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Gordhan: As Minister Nene put it in his October Medium Term Budget Policy Statement address: “If we do not achieve growth, revenue will not increase. If revenue does not increase, expenditure cannot be expanded."

14:25
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Gordhan: Our economy is not growing fast enough to raise employment or improve average incomes. Investment growth must be substantially scaled up.

So we are resolved to restore the momentum of growth, to ensure that it is inclusive and sustainable, and to preserve our economy’s investment-grade status.


14:24
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Of 13.7M registered taxpayers, fewer than 1M individuals contribute 64% of personal income tax revenue #Budget2016pic.twitter.com/CMfL3lO2iO

— KPMG South Africa (@KPMG_SA) February 24, 2016

14:24
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Gordhan: Overall export growth by volume was over 9% last year, and will continue to benefit from the competitiveness of the rand. South African exports to the rest of Africa now exceed R300bn a year, up from about R230bn just three years ago.

14:23
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Gordhan: In the numbers, there are indicators that an economic turnaround is possible if we build confidence and make the right choices.

14:21
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Gordhan: The Treasury currently expects growth in the South African economy to be just 0.9% this year, after1.3% in 2015. This reflects both depressed global conditions and the impact of the drought.

14:21
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Gordhan: Our own structural challenges and reforms are articulated in the National Development Plan. Our economic recovery depends on our ability to convert the plan into actions that deliver on the promise for a better life for all.

14:20
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Vedika Andhee, director for Tax at EY Africa: Higher income earners can breathe a sigh of relief as the top tax rate remains 41%. South Africa therefore retains its number three spot with the third highest personal income tax rate on the continent.

14:19
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Gordhan: South Africa’s economic prospects are intertwined with global economic developments. A period of unprecedented monetary stimulus in response to the 2008 recession is not yet over, and global volatility and structural imbalances are far from resolved.

14:18
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Gordhan: Engagement with social partners needs to be intensified. Project plans and investments need to be managed and implemented.

14:18
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Gordhan: Insurance White Paper has been published, and proposals for comprehensive social security will be released by mid-year.

14:16
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Chris Harmse, chief economist of Rebalance Fund Managers: Budget deficit as % of GDP will be 3.2% and is much higher than the 2.6% envisaged last year, but lower than the 3.8% of last year . It will help to avoid a credit downgrading.

14:16
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Chris Harmse, chief economist of Rebalance Fund Managers: Economic growth rate downwards adjusted to 0.9% and much higher than IMF and World Bank forecast’s. This is much lower than last years prediction of 2.4% and puts large constraints on the budget.

14:15
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Gordhan: This is indeed a tightening of the belt.

14:14
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Gordhan: In brief, we propose the following:

• Against the background of slow growth, rising debt and higher interest rates, the pace of fiscal consolidation will be accelerated. The budget deficit will be reduced to 2.4 per cent by 2018/19.

• The expenditure ceiling is cut over the next three years by R25 billion, mainly by curtailing personnel spending.

• Tax increases amounting to R18 billion in 2016/17 are proposed, and a further R15 billion a year in 2017/18 and 2018/19.

• An additional R16 billion is allocated to higher education over the next three years, funded through reprioritisation of expenditure plans.

• Taking into account projected increases in the cost of living, R11.5 billion is added to social grant allocations over the next three years.

• Funds have been reprioritised to respond to the impact of the drought on the farming sector and water-stressed communities.


14:14
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Gordhan: The budget today is guided by the NDP

14:13
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Gordhan: [The NDP] It recognises that improvements in the quality of education are the foundations of broad-based growth, productivity improvement and sustainable growth.

It highlights that partnership between government, business, organised labour and civil society is the key to policy coherence and more rapid development.


14:12
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Gordhan: [The NDP] It is a plan for a strong mixed economy – in which public services and state actions complement private investment, expansion of trade and social enterprise.

14:12
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Gordhan: Regarding the National Development Plan:

It is a programme for inclusive growth – our social programmes, industrial action plan, promotion of agriculture and rural development, skills and training initiatives, investment in housing and municipal services are aimed at both prosperity and equity, creating opportunities for all and broadening economic participation.


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