Pravin Gordhan’s “mini” budget speech was the most anticipated speech of its kind since forever. I mean, it was even covered by CNN.
And while the speech came and went, complete with protests, money-talk, and some kind of national satisfaction, getting your head around the whole thing can be tremendously intimidating.
Gareth Frye from Currencies Direct (who send you a four-sentence mailer every day breaking down all you need to know about South African economics) offered a little bit more in his mailer today, succinctly breaking down the budget:
SA’s economy
- As the economy enters a difficult transitionary phase we will find several struggles
- Low confidence is the biggest obstacle to growth
- SA’s growth rate for 2016 is revised down from 0.8% in February to 0.5% and 1.3% for 2017
- The budget deficit is expected to narrow around 3.4% to 2.5% of GDP by 2019/20
- 2 Fiscal challenges
– Medium term – avoiding a low growth trap
To avoid this trap, government proposes a balanced consolidation, supported by action to rebuild confidence for investment
– Long term – realising the aspirations of the constitution within available resources
Difficult trade-offs are needed to resume the expansion of public resources available for social and economic development.
Globally
- Low-interest rates in US, EU and Japan have supported capital inflows to developing economies
- Countries that are highly reliant on foreign savings, will remain vulnerable to global volatility (this includes the rand)
Taxes
- Will be going up in 2017, to the tune of R28bn
- How remains to be seen, and be will announced in the 2017/18 budget in February
- In the mean time, ask Galbraith Rushby what the future might hold.
Tertiary Education #feesmustfall
- Universities and students will receive an additional R17 billion over the medium term
- University subsidies to grow at 10.9% per year
- The NSFAS (National Student Financial Aid Scheme) budget is set to grow at 18.5%
State Owned Enterprises
- Advisers will be appointed to provide technical assistance as government considers the possible realignment of its airline shareholdings
Exchange Control
- It’s business as usual for Currencies Direct, with no changes announced
But then, you get people like Fin24 who so kindly put together an Infographic, covering everything you need to know:
But at the end of the day, the best clarity comes from speaking to professionals, like Galbraith Rushby, who offer professional tax compliance and advisory services to individuals and business. After all, tax efficiency and compliance are critical factors which affect everyone.
[source:fin24]
