‘The overall welcome impact of the Budget on the economy will be positive and confidence-building. The markets will also price-in what is a ‘good news’ Budget in favourable fiscal circumstances. Finance Minister Enoch Godongwana has displayed a credible pair of hands in playing well the better economic cards he now holds in addressing the inevitable competing demands on South Africa’s still limited public finances. While global factors still pose a risk, South Africa’s terms of trade have improved as a result of the commodity price boom.

The Budget strategy now offers a more stable macro-background, with the prospect of further interest rate cuts this year, and possible sovereign credit rating upgrades over the next couple of years. Business and consumer confidence should also gain from the Budget relief on ‘bracket creep’ and medical aid credits. The major advantage of building confidence in fiscal sustainability through the Budget’s commitment to higher inclusive growth is not only that it strengthens resilience but also makes other aims - such as job creation and a bigger tax base - easier to attain.

‘Rapid growth is the only path’, said Finance Minister Enoch Godongwana. South Africa therefore now needs to shake off the chains of a low-growth economy. The present economic recovery is still modest and uneven. The economy is not yet on autopilot and disappointed expectations can still easily become self-fulfilling. Much higher levels of fixed capital formation are now needed if the Budget’s modest near-term average growth projection of 1.8% is to surprise on the upside and eventually meet the GNU’s GDP growth target of 3.5% by 2030.

Post-Budget, a litmus test will therefore be whether a sufficient number of companies now feel that the policy environment and growth prospects justify their making fresh plans for expansion. The VAT assistance to SMMEs is welcome. President Cyril Ramaphosa’s next Investment Conference in March must be another platform to help do so. Once again, the challenge remains to ensure that growth-friendly policy and project commitments are translated into reality in ways that underpin long-term investor confidence, as well as making a tangible difference in effective delivery.

Hence the slow pace of structural reforms, high crime levels, and widespread corruption are key constraints be further successfully tackled. Procrastination, weak state capacity, and corruption have been widely identified as enemies of delivery. The emphasis placed in the Budget Speech on mechanisms such as Operation Vulindehla and enhancing the role of the private sector remains essential for strengthening South Africa’s future economic performance.’