Key points
- Our core hope is that the National Treasury can justify optimism in the GNU by highlighting shifts in the National Budget that will increase the economy’s growth potential.
- As is always the case in South Africa, there is a lot of noise and many cross-currents to deal with.
- For several reasons, this is arguably one of the more important budgets in the past decade. The authorities no longer have many fiscal options left to explore. The last remaining fiscally sound option for spending rather than cutting expenditure was exhausted when the GFECRA funds were earmarked to reduce required borrowing.
- The budget details how the government plans to implement reforms with its priorities laid bare for investors to assess. Ironically, the best news would be if the government aims to do less by liberalising certain industries, as this will encourage the private sector to play a more active role. Encouraging private sector investment would reduce economic imbalances which is undoubtedly a more sustainable solution than trying to squeeze more out of such a limited tax base.