Lock in at Parliament with budget speech

Gordhan Pravin with limited choices…

pravin gordhanRarely does a medium-term budget statement  in Parliament attract the kind of attention as has the current speech by South African finance minister, Gordhan Pravin.

He has been in a most difficult position. He is in fact juggling with the country’s “twin peaks” budget deficit numbers in order to come up with something that does not surrender the nation to movement down to a much lower position amongst the coterie of developing and emerging economies.

To amplify on the importance of what he says and how the newspapers and news agencies – and therefore world trading markets – depend on timeous information on this speech and perhaps it is worth pausing to note how the system in Parliament works.

Lock in part of parliamentary process

At a defined time a few hours in the morning preceding the speech that afternoon, all accredited financial journalists and those associated with news dissemination, gather in an allocated parliamentary meeting room and security is, to use the American phrase, “locked down”.  The doors are actually locked.

Even cell phones, i-phones, satellite phones and any form of communication device that has been invented since Graham Bell first telephoned anybody, has to be surrendered to parliamentary officials.      At that point round about 11.00am or mid-day, everybody gets to see the speech to be made by the finance minister Gordhan Pravin, scheduled for 15.00hrs, the same day.

This gives all those in the “lock in” the few hours needed to disseminate, consider and write what they wish to communicate on the budget itself, at that point the media being the only members of the public, especially the financial markets (and the rating agencies), to have any knowledge of what is to be said. There are no wi-fi facilities for laptops.

As the minister speaks……

At precisely the same time as the minister utters his first words in the House reading the Medium Term Budget speech, the doors are unlocked, cell phones returned, all journalists and media may release their material to the markets and well before the minister has finished his speech, Reuters, et al, have released their statements to the markets.

All of this, however utterly childish it may seem at the time, gives an indication of how important budget speeches are and the value of the message that is sent by the accumulated force of financial journalism – this particular budget speech being a sensitive one.

Of course, all would hope that in a perfect world minister Gordhan puts a freeze on public service pay packets for two years; announces further massive infrastructure spends with international funds for education, road and harbours; offers soft incentives to encourage exports with a weak rand and speed up the National Development Plan with ideas to counter the US resurgence. But all of this is unlikely.

Certainly on the left

ParlyReport is not a newspaper, so we confine our observations to monitoring government plans, department by department, in next issues but it is worth noting that finance minister Gordhan, himself a committed socialist and dealing with a cabinet that includes many a communist and certainly a number of trade unionists, will walk the tightrope with an election coming and votes needing to be collected, especially in the Northern Cape and Gauteng.

Our guess is that minister Gordhan will be forced to “talk the talk”, not “walk the talk”, talking his way through this one with South Africa in the grip of sluggish economic growth and an election coming. We should not expect too much from this speech other than bravery and it is hoped that minister Gordhan will resist pressure from the unions.

Our report therefore now relies upon the mundane and the “inside track” as usual and we await, like all, the results…….  although attending the “lock in” is an enjoyable process of watching the parliamentary system working and the financial markets re-acting.

Headlines to our clients this week were:

•    Codes of Practice given one year installation period
•    Nuclear stakeholders meeting avoids objections
•    Intellectual Property Bill aimed at medical patents
•    Shale gas regulations out for comment
•    Home Affairs in the mire
•    PetroSA keeps them all guessing
•    Minister of Finance tables Bill at halfway year budget
•    Central Energy Fund emerges from the shadows
•    Marcus steadies the ship
•    Land rights takes another step with new Bill
•    Department of energy reports for the year

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