The National Budget speech, which was due to be announced on Wednesday 19 February 2025, was cancelled at the last minute in an unprecedented, shock move. This was apparently due to material miscommunications between various members of the GNU.
This, notwithstanding the various protagonists having been aware for at least a full year that the presentation of the Budget was due, and that perhaps a conversation regarding its contents was appropriate.
The world is watching South Africa and is mindful of the numerous challenges, many self-created, that the country has faced in recent times.
The country is on the FATF grey list, it has been punished by the rating agencies in recent times and the Rand is as vulnerable as ever. It is a material, “own goal” to have not been able to produce a budget in these circumstances.
A strong, positive message was needed to encourage the world about the track that the country is adopting, at least from a fiscal perspective. Our foreign affairs policy has been vague, at best, in recent times and the Treasury has generally been the one bedrock of predictability in the past.
What the postponement of the budget says to the world is directly contrary to the message we should be sending.
Ordinary South Africans believe that they can only watch in horror, often as powerless bystanders, as the politicians play silly-buggers with the fate of the country.
But are ordinary South Africans that helpless; is all that they have left is to spectate? The answer is a firm: “No”.
It is now more important than ever for South Africans to plan their affairs with the knowledge that one of the risks to their asset base and their own personal wealth is their own government. Residents who do not take action and plan accordingly will only have themselves to blame.
Planning is about anticipating different scenarios, and taking predetermined steps to ameliorate the negative consequences of the various scenarios that were envisaged. When times are bad, planning is even more critical than ever, albeit that the necessary steps may be complex and/or expensive to implement.
The primary planning opportunity available is to take careful stock of one’s asset base, and move as much of it offshore as possible. Ironically, South Africans are currently operating under the most flexible version of the exchange control regime in decades, possibly ever.
While it may seem counterintuitive that, at a time when the country seems at odds and ends, its residents are allowed to move funds abroad with relative ease, this is undoubtedly the case. The cost and effort involved will no doubt be significantly less than having all of one's eggs in a basket which, one day, falls apart at the seams.
At Osborn Wellsted Paulsen, we are well versed in offshore structures that allow residents to derisk themselves against country risk, be it related to a dysfunctional government, the currency or otherwise.
Failing to plan is planning to fail; the time to act is unequivocally as soon as possible.