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Budget: technical or political?

12 February 2004 Angelo Coppola

Angelo Coppola reports that one bank economist doesn't expect any surprises when the budget is announced next week. Although he does think it is time to change the members of the cast on the day.

Iraj Abedian, chief economist at Standard Bank, says that the country's fiscal situation is on a sustainable and stable path.

"No surprises are a sign of a good technical budget. But when used as a political tool by the government of the day, then there may be some trips back to the proverbial drawing board."

He asserts though that maybe its time for a change of face. He maintains that Budget Day should be precisely that - a day where the line managers, read national ministers, stand up in Parliament and explain their budgets, what they have done, what they have spent, and perhaps most importantly how efficiently they have spent it and to what avail.

The current economic challenges include economic growth levels, reducing unemployment, and poverty alleviation. On the other hand an unsustainable budget is economic suicide.

He predicts that the budget will be geared towards growth as a higher deficit doesn't threaten the macro-economic stability or fiscal sustainability, although there are limits to deficit financing however.

He says that the fiscal policy has to contribute to the economic objectives of job creation and economic growth, subject to fiscal sustainability and alleviating disparities.

Generally the fiscal allocations are growth-friendly but the emphasis should now fall on more efficient use of resources.

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