FINANCE Minister Pravin Gordhan is a negative saver who destroys capital‚ Efficient Group chief economist Dawie Roodt says.
Speaking at the Cape Town Press Club on Tuesday‚ Mr Roodt said: "The minister of finance is actively destroying between R100bn and R150bn worth of savings every year. The minister of finance is a negative saver and the minister of finance destroys capital.”
Mr Roodt said he meant that the economic and political circumstances in which Mr Gordhan found himself were causing him to be labelled a negative saver.
Mr Roodt was speaking about his expectations and analysis of the medium-term budget policy statement that Mr Gordhan is due to deliver later on Wednesday.
Mr Roodt pointed out that the government was spending more than it was saving‚ as seen in South Africa’s current account deficit‚ which is at 6% of gross domestic product (GDP). He said South African households did not save‚ though they were not dissaving‚ either‚ and the only real savers in the South African economy were corporations — which saved an equivalent of about 17% of the economy.
He said there was a gap between investment and saving in South Africa which "has to be plugged from abroad … by foreigners”.
This meant‚ Mr Roodt said‚ that the minister of finance was borrowing long-term money for short-term expenditure such as salaries.
"In order to improver domestic savings‚ we have to encourage the minister of finance to spend less‚” Mr Roodt said.
He said GDP growth for this year would be on the low side‚ offering a prediction of 1.9%.
This is lower than Mr Gordhan’s earlier prediction of 2.7%‚ while the International Monetary Fund has predicted 2% growth.
Mr Roodt based his prediction on the impact of the strikes on the mining sector and the fact that the platinum mining houses‚ traditionally big dividend issuers‚ would not be issuing such large dividends this year.
"The problem is that all sorts of ratios are distorted if the economy does not keep pace with the minister of finance’s expectations‚” he said.
Mr Roodt said the big story would be taxes on dividends and he expected an under-collection of R3.5bn.
"For some reason companies are not paying dividends‚” he said.
Mr Roodt said the fiscal deficit would be very close to the original budgeted estimate at R180bn‚ expressed as a percentage of GDP at about 5.3%. © BDlive 2013