Brief company comment on Budget Speech

Citadel: Pragmatic budget from Minister Manuel

Finance Minister Trevor Manuel stuck to his guns with his focus on development of the economy and programmes to uplift the poor in his budget announced today.

“Growing the deficit at a time when the economy is contracting is a pragmatic approach. The Minister’s expectation of GDP growth is a bit optimistic, given the global climate, yet he has the space to increase the budget deficit at this stage because of past prudence,” Jan van Niekerk, Chief Investment Officer of private client wealth management company Citadel, said.

“We applaud the way in which the Minister has prioritised spending in a surprisingly expansionary budget. We further support his emphasis on efficiency and quality of service delivery and especially his comments about delivery at municipal level,” Van Niekerk said.

“However, we are concerned with government’s increasing role in the economy. The role of government has grown steadily in recent years and if left unchecked this could become a problem in future,” he said.

Momentum Wealth Budget Comment

“While there was great uncertainty around whether there would be any tax relief, the significant relief granted to individuals is largely welcomed. This is combined with adjustments to the interest exemption and annual exclusion for CGT, which is aimed at promoting savings. These adjustments together with the interest rate cuts of last week will provide consumers with some relief in these difficult economic conditions. The adjustments to social grants may however be viewed as disappointing as there were expectations that this increase would be higher. As is customary ‘sin taxes’ have been increased.”

Navin Ramparsad – Head Legal & Compliance, Momentum Wealth

FNB Trust Services comments on the Budget speech

In his 2009 Budget, Finance Minister Trevor Manuel really paid a huge focus on how the government officials need to be responsible with the monies allocated to them, and that ethos of responsibility should be taken down to the individual in the way they deal with their own assets.

The message was we living in tough times, and South Africans need to remember that long-term approach on things is probably more important than the short-term. This means that cancelling your Retirement Annuity or cashing out your investment for short term use/liabilities may not be a wise thing to do, as it may put your family in great risk should an emergency occur in the future.

At such times as this, we would advise people to really sit down and think hard about their asset structure and long term liabilities and apply these to a sound and sober financial plan.

Lastly, South Africans should evaluate their choices, and go for what is responsible rather than unnecessary luxurious.

Barbara Botha, Head of Legal for FNB Trust Services