Trade deficit improves by R9bn - SARS

Johannesburg – South Africa improved its trade deficit by R9bn compared to January 2016’s value of R19.55bn, according to data from the South African Revenue Service (SARS).

The tax authority's trade statistics show a trade deficit of R10.81bn for January 2017. Imports of R91.4bn exceeded exports of R80.59bn. During December 2016, exports declined by 14% or R13.09bn, and imports rose by 12.5% or R10.13bn.

The report by SARS shows these statistics are based on trade data with Botswana, Lesotho, Namibia and Swaziland. Excluding these countries from the data translates into a deficit of R17.57bn.

The report also shows South Africa had an overall trade deficit with America, Asia and Europe. The country reported a trade surplus with the rest of Africa.

Exports of vehicles and transport equipment were down the most at 32%, followed by prepared foodstuffs at 27%, machinery and electronics at 25%, chemical products at 12% and mineral products at 10%.

Conversely, imports of equipment components were up 154%, followed by footwear and accessories at 54%, textiles at 53% and base metals at 48%.

The trade deficit was in line with market expectations, said Karl Gotte, head of Standard Bank commercial banking. “The fragile nature of the economy is emphasised by deeply pessimistic consumer and business confidence, elevated indebtedness, high unemployment and social unrest and political uncertainty with the public sector also trimming its fiscal spending,” he added.

Gotte explained that the firmer rand could have a positive effect on futuretrade flows.

Given economic growth projections of 1.3% for 2017, Gotte said businesses should take new measures in exploring new markets, while remaining profitable.

“With the World Bank expecting the economic growth rate from the sub-Saharan African regions to be lower at 2.5% due to low commodity prices, high food prices and weakening currencies, businesses will need to be more innovative to ensure sustainability.”

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At a press briefing on Friday, SARS commissioner Tom Moyane explained that with customs duties being down, the organisation's ability to collect revenue was impacted. He explained that the low economic growth further impacted personal income tax as well as VAT collections.

This contrasted with statements made by Finance Minister Pravin Gordhan during the National Budget Speech regarding the efficiency of SARS.

In his speech, Gordhan said SARS must continue to develop the skills and capacity needed to enforce legislation and strengthen its efforts to curb tax avoidance and evasion.

At a briefing later that week, Gordhan said that the fiscal health of the country is linked to SARS’ capacity.

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However, Moyane hit back, saying there is no capacity issue at SARS and that the organisation is not falling apart.

“To those who might be listening and looking to us, there is nothing falling apart in this organisation, we are stronger by the day and we are resilient and we will do what is correct,” said Moyane.

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He also said he has a team of competent staff. Moyane said reports that senior staff had left, with their institutional knowledge, was not an issue.

“This issue of losing people narrative is losing traction… to count the number of people who left SARS was five or six,” he said. “They left on their own volition and (this) does not indicate a lack of skills and capacity in the organisation.”