Gordhan: SA economy expected to grow by 0.5% for 2016

Pravin Gordhan is delivering his Medium Term Budget Policy statement in Parliament.

JOHANNESBURG - Finance Minister Pravin Gordhan says the economy is expected to grow by 0.5 percent for 2016, down from the 0.9 percent estimated in February.

He is delivering his Medium Term Budget Policy statement in Parliament and received a standing ovation when he was called to the lectern.

Gordhan says his department expects growth to rise to 1.7 percent next year.

"Our own economic forecast for 2016 is 0.5 percent and not the 0.9 percent we thought earlier in the year. Rising up to 1.7 percent in 2017, if we do the right things to support investment and confidence, our economic recovery will certainly be more rapid."

He adds South Africans have high expectations and need to work together, including on the political front.

He used a Sepedi to emphasise that the national interest has to be put first.

"Translated it means: Lions that fail to work as a team, will struggle to bring down even a limping buffalo."

Gordhan says the economy needs to grow and revenue needs to be generated, meaning higher taxes.

"We propose to raise an additional R43 billion through tax measures. R28 billion of which will be in the coming fiscal year."

The minister also says money is being set aside for tertiary education.

"We expect a better future for our children, particularly through education and the entire education system."

In February, R16 billion was added to the higher education budget.

Gordhan has announced that a further R9 billion has been allocated to the National Student Financial Aid Scheme over three years, raising its funding by over 18 percent a year.

Over R8 billion has also been freed up to meet the costs of fee increases for students from households with incomes up to R600,000.

Gordhan is under unprecedented pressure, dealing with the economic challenges facing the country as well as the fraud charges brought against him by the National Prosecuting Authority.

Low economic growth means less money coming into state coffers - at a time when students' demands for fee-free education that have seen violent protests sweep campuses the country.

Minister Gordhan will today guide South Africa's economy through a period of low growth, a drop in revenue and massive spending pressures - including the higher education funding crisis.