“In a measured policy assessment by the Minister of Finance, Enoch Godongwana, in his first Medium-Term Budget Policy Statement (MTBPS) he confirms that South Africa’s public finances remain in safe hands and that there will be broad continuity in fiscal policy.”

Prof Raymond Parsons, economist from the Business School of the North-West University (NWU), says it was also reassuring that Minister Godongwana had a better story to tell in the MTBPS than had been expected at the time of the Budget in February of this year.

“The economic tailwinds of high global commodity prices and the opening up of the economy at a Level 1 lockdown generated a tax revenue windfall of R120 billion, thus creating more fiscal space.

In utilising this windfall the MTBPS has for now presented an acceptable balance between the competing claims of debt stabilisation, increased social spending and ongoing public-sector wage issues.”

Prof Parsons says the finance minister has had to walk a fine line. “But as some key decisions have been postponed to the main Budget in February next year, it is only then that an overall budget judgement can acquire precision.”

He points out that there are still several risks on the spending side that will require to be smartly managed. There are a number of uncertainties that still need to be resolved. The Eskom load-shedding also continues to loom large over South Africa’s economic performance.

“Although the MTBPS expects a robust growth rate of 5,1% in 2021 thanks to a unique combination of factors this year, its average gross domestic product (GDP) growth rate forecast over the next three years is only 1,7%. This will continue to present South Africa with challenges at several levels, especially in expediting the implementation of necessary structural reforms to underpin and enhance future job-rich growth.”