Cut credit cards and you don’t dare think luxury cars. Period.
This is an attempt to save up to R2b in the process.
No public funds will be used to buy alcohol, all official credit cards will be revoked immediately and ministers will be banned from travelling first class.
No more ministers splurging R1 million on luxury cars and prolonged stays in upmarket hotels.
Craig Pheiffer, Head at Private Client Asset Management, Absa says:”As widely expected, Finance Minister revised lower the economic forecasts put forward by National Treasury at the reading of the National Budget in February this year.
With the International Monetary Fund, the South African Reserve Bank (SARB) and the markets in general looking for domestic Gross Domestic Product (GDP) growth of just 2,0% in calendar 2013, it was no surprise that the Minister reduced the growth outlook for the fiscal year 2013/14 to 2,1% from an original estimate of 2,7%,” he says.
Entertainment allowances will be limited to R2 000.
Posed to him whether the new rules would apply to President Jacob Zuma, the minister said the Presidency was a government department and would have to implement the same savings as others.
With seven months to go before the 2014 elections, the cabinet’s decision has effectively fast-tracked the austerity measures – their announcement was initially scheduled for the 2014 Budget in February.
Other cost-cutting measures would include no compensation for the use of personal cars from December 1. Assistants to ministers would be limited to two.
Guidelines to limit the amount of money spent on advertising would be introduced.
Departments would have to buy cars in bulk and not one car at a time to negotiate discounts.
The elimination of perks for cabinet ministers would save only a few million, but if applied across the board, it could bring savings of up to R2bn.
As expected, Gordhan focused parts of his speech on the National Development Plan (NDP).
He said the medium-term budget demonstrated the government’s resolve to implement the NDP through, among others, the expanding of electricity, transport and communications capacity and promoting industrial competitiveness and job creation.
“So we have a plan, and we now have to track progress, year by year, on its implementation,” he said.
Tax incentives for industrial development projects amounting to R10bn have been approved over the past three years, which would support investment amounting to R35bn.
Continued Pheiffer:” While there were some tweaking of the numbers here and there and the introduction of the new reporting methodology, there were no meaty changes to policy or any contentious issues raised.
There was not a peep on the Carbon Tax, for example or any word on the National Health Insurance this time around,”he says.
“Overall the headline numbers on the budget deficit look better, thanks to the new reporting approach. Nevertheless, the outlook is still for a low growth environment for the next three years with a modestly improving budget deficit and a rising level of sovereign indebtedness.
It remains to be seen whether the ratings agencies have found enough in today’s announcement to maintain our rating at its current level. We will not have to wait long to see as Standard & Poor’s and Fitch will be in town soon,” concluded Pheiffer cheekishly.
Opposition parties also commended the minister for taking a hard stance against abuse of state resources.
For the ordinary this kind of news is a sign of relief, particularly in the wake of uprisings and violence taking place due to lack of service delivery.
The message is clear and bold: save or face repurcussions.
