CAPE TOWN - The revenue shortfall of R50bn will be made up by some stop-gap measures, but the debt-to-GDP ratio is still forecast to slide to more than 60% by 2022 and economic growth has been revised downwards for the medium term in line with the IMF.
For investors, nothing was said they didn’t already know and there were no unwelcomed surprises, but there hasn’t been enough done to start restoring confidence.
As the Minister himself alluded to, government today is itself the problem, and whether it has the ability to fix itself is still very much an open question.
One thing that is clear is the Minister clearly doesn’t think South Africa can afford nuclear power.
Whether he can follow through on this and the other hard expenditure decisions that need to be made and were largely avoided this time around remains to be seen.
Our base-case scenario remains it is unlikely SA will avoid any further credit rating downgrades if the status quo persists.
David Crosoer is the Executive of Research and Investments at PPS Investments.