South Africa: Budget 2018 - Without Structural Reform, a Better Life Will Elude Us

analysis

Can President Cyril Ramaphosa translate his political ascension into an economic reformation?

Finance Minister Malusi Gigaba's Budget may have done enough to stave off the risk of an imminent downgrade, but in the absence of any indication of the profound changes in policy direction that South Africa now requires, the reprieve will probably be temporary.

This forces the question as to whether President Cyril Ramaphosa can translate his political ascension into an economic reformation.

Ultimately, President Cyril Ramaphosa and the Cabinet he appoints will have to up their game, because what was presented in the Budget is far from a compelling case for economic growth.

It is worrying that the medium-term expectation is for South Africa to continue underperforming regional and emerging market growth averages by around 50%.

The current growth projections will put paid to the prospect of a medium-term employment uptick.

That reintroduces risks of political instability, and presents a horizon for the Ramaphosa honeymoon.

The government is in a wholly unsustainable fiscal position.

Government expenditure now accounts for a record more than 30% of GDP. Even as the economy was collapsing around the ears of the National Party government in the 1980s, expenditure levels...

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