South Africa: Cautious Optimism for Mboweni's 'Fascinating Budget'

South African Finance Minister Tito Mboweni prepares to deliver his Budget speech on February 26, 2020.

Economists and analysts are a tough crowd to please. Finance Minister Tito Mboweni's Budget on Wednesday 26 February at least struck the right notes.

Economists have given a cautious thumbs-up to the 2020/21 Budget that Tito Mboweni presented to Parliament, which is an improvement on the Medium-Term Budget Policy Statement that he delivered in October. In a nutshell, the Budget deficit is seen climbing to 6.8% of GDP in the coming fiscal year and over the next three years, there is R261-billion in planned cuts, with R160-billion seen coming off the public sector wage bill.

"This is a fascinating Budget," Peter Attard Montalto, the head of capital markets research at Intellidex, told Business Maverick.

"Tito has thrown the kitchen sink at the unions, and the public sector wage war has started. This will be a shock to realign politics and is strategically smart to maximise the chances of success."

But he also noted that the economic growth forecasts - 2020's has been pegged at 0.9% - looked optimistic, after the economy probably barely registered any growth in 2019.

"I don't think Mboweni's speech will help South Africa to escape a Moody's downgrade to junk status," said Shawn Duthie, managing director...

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