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The Medium-Term Budget Policy Statement (MTBPS) held little in the way of surprises but it was both a rallying call to all South Africans and a strong rebuttal to the fiscal naysayers.
 
If there was one surprise in the MTBPS, it was that the expenditures for the next three years initially tabled in the Medium-Term Expenditure Framework (MTEF) in the February Budget would be unadjusted says Craig Pheiffer General Manager for Absa   Investments: Private Client Asset Management.
 
Commenting after the MTBPS presentation by Minister of Finance Pravin Gordhan in Parliament today Pheiffer says, expenditure has always been pushed higher in the October Budget revision, and this year’s decision was a welcome sign that the fiscal authorities have a strong hand on the tiller. There was R40bn of adjustment to the destination of the expenditure in the current year but the overall numbers were kept constant.
 
Pheiffer says while there were several downward revisions to the National Treasury’s economic assumptions, these were all in line with current market thinking and appear   realistic. “GDP growth of 2,5% for 2012 and 3,0% for 2013 is in line with market expectations.
 
“Revisions to the inflation and current account outlook were also not out of kilter with current market thinking,’ he notes.
 
An expected revenue shortfall of R5bn was noted by the minister and this drove the budget deficit wider and the funding requirement higher. The revised outlook was again in line with market thinking and pointed to a reduction in the deficit to 3,1% of GDP by 2015/16 (the first time that 2015/16 is being estimated).
 
Pheiffer says the minister re-iterated, as he has over the recent past, that times are challenging on both the domestic and international front and are likely to remain that way for the foreseeable future.
 
Minister Gordhan was adamant though that South Africans have the collective ability to meet the challenges of the day and to go on and prosper. But it needs to be a collective effort, concurred Pheiffer.
 
He notes that the minister had many words for those who doubted the soundness of fiscal policy and the ability of the National Treasury to meet its growth, job creation and poverty reduction ambitions.
 
 
“On more than one occasion he mentioned that there was no crisis and that South Africa was placed in a sound and sustainable fiscal position. He repeated his intention for us all as citizens to prove the pessimists wrong – a statement clearly intended for the ratings agencies,’ concludes Pheiffer.