Ramaphosa confident budget will help SA

Beyond the Shadow State: The Ramaphosa-struck must guard against replication of false narratives

Though it remained to be seen whether Gigaba would be the one tabling the budget in parliament on Wednesday, his spokesman indicated there was no stepping back from tough measures which have also been emphasised by Ramaphosa.

Additionally, the EFF opposes a budget regime that raises VAT and targets the personal incomes of lower paid workers, to the exclusion of Corporate Income tax, as a means to raise revenue.

The budget deficit is expected to narrow to 3.5 percent of gross domestic product (GDP) by 2020 from 4.3 percent in the 2017/18 fiscal year, while gross debt is seen narrowing to 56 percent of GDP in the 2020/21 fiscal year from almost 60 percent seen in the October mid-term budget statement.

"The budget was probably enough to avoid another downgrade, at least for now", said John Ashbourne, Africa economist at Capital Economics in London.

But in Parliament Ramaphosa said he was ready to atone for his role. Analysts forecast this year's growth will jump to 1.8 percent. "The biggest challenge will be turning around struggling state-owned enterprises".

But treasury officials sought to project a relatively optimistic outlook as they assessed economic prospects for the immediate future. "It is mostly because South Africa's political transition and renewed optimism have raised hopes that growth and governance will improve significantly in the years ahead".

As Gigaba read his budget speech, the rand ZAR=D3 extended gains to 0.81 percent against the dollar, government bonds firmed and retail shares on the stock exchange fell.

Better sentiment since Ramaphosa took over leadership of the ruling party, and the government, is expected to help lift economic growth.

Shayne Heffernan Funds Manager at HEFFX holds a Ph.D.in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b.

It calls on President Ramaphosa to remove Gigaba as finance minister with immediate effect. It didn't promise any additional funding for cash-strapped state-owned companies, although provisions could still be made and financed by selling about R40bn's worth of state properties. "We will have to find resources, probably through the sale of state assets".

"The president ultimately has the prerogative over this issue", Gigaba told reporters before his speech.

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