By Andre Janse van Vuuren and Kevin Crowley
(Bloomberg) — South African Finance Minister Pravin Gordhan wasted an opportunity to improve the health of the economy by not announcing significant sales of state assets and steeper tax increases when he delivered the annual budget on Wednesday, the leader of the biggest producer of gold from mines in the country said.
While Gordhan undertook to cut the civil service and sell a minority stake in the state-owned airline, he should have proposed the privatization of state power-utility Eskom Holdings SOC Ltd., Neal Froneman, the chief executive officer of Sibanye Gold Ltd., said in an interview at Bloomberg’s offices in Johannesburg on Thursday. Froneman said South Africans were prepared for Gordhan to announce bigger tax increases.
“Pravin did present a reasonable budget, but I think he could’ve done a lot more,” Froneman said. “He had a once-off opportunity where he’s got a lot of power to implement some of the right things that are necessary for the country to change, especially if growth is the key issue.”
Froneman’s criticism of Gordhan’s budget echoes those of some investors who were expecting more significant tax increases and state asset sales to boost revenue.
The rand fell as much as 3.5 percent against the dollar on Wednesday after the release of the budget and yields on 1-year government bonds rose 16 basis points. The rand pared some of its decline on Thursday.
“The budget and the country’s finances perhaps are in check, but there are many other things that are required for South Africa,” Froneman said. “We’ve only heard things. We need to see action. The fundamental issues have not changed.”
