Gordhan 'reassures investors'

A political economist has described Finance Minister Pravin Gordhan's speech as assuring to investors and designed to lead the country out of the recession.

A political economist has described Finance Minister Pravin Gordhan's speech as assuring to investors and designed to lead the country out of the recession.

With an assurance that the Reserve Bank would remain independent and its Constitutional mandate unchanged, Gordhan calmed fears in big business and the markets following recent suggestions to nationalise the central bank.

Political economist Mohau Pheko said Gordhan also assured left-leaning organisations in the ANC-led tripartite alliance - Cosatu and the SACP - by setting aside R6,7billion to subsidise water and electricity for poor households.

"The budget is designed to stabilise the markets and calm the fears of big business and investors.

"The minister emphasised the independence of the Reserve Bank, adding that inflation targeting will remain within 3percent to 6percent," she said.

Pheko said it was worrying that government spending was increasing along with its borrowing, leading to a deficit of R182,5billion.

"For the last 10 years, we brought down the budget deficit from 50percent to 20percent of GDP, but the expansion of the government budget and any future borrowings are likely to take the budget deficit back to 50percent."

Gordhan also said the government was already treating 920000 Aids patients and intended to extend this to 2,1million by 2012, while the overall health budget was increased to R105billion.

X