South Africa: Medium-Term Budget Leaves SA Globally Vulnerable

South Africa's Finance Minister Tito Mboweni delivers his medium-term budget policy statement on October 30, 2019.

Tito Mboweni's rhetoric and a failure to show any real progress in reducing government expenditure saw financial markets vote with their feet in response to the medium-term budget.

The market gave the medium-term budget framework a big thumbs-down, with the rand rapidly moving past the R15 a dollar mark as investors headed for the hills. Meanwhile, economic commentators bemoaned the government's failure to make a dent in the R250-billion expenditure cuts it needs to make over the next three years.

The government's perceived failure to make the tough decisions was also seen as putting the country in an exceptionally vulnerable global position that has, until now, been pretty forgiving of South Africa's economic fiscal predicament.

Investec economist Nazmeera Moola didn't pull any punches in her assessment of the mini-budget:

"It was a disaster. Clearly, the ANC is unable to make any decisions and this leaves South Africa vulnerable to any deterioration in the global economy."

She would have liked to see the government make real progress on reducing the public sector wage bill, instead of the disappointing take-up of the voluntary retrenchment and early retirement packages offered to civil servants.

"Unfortunately, it seems unlikely that the financial markets will give...

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