Giving Meaning to South Africa's Ocean Economy

Calvin Saunders
February 25, 2018

"The decision on Value-Added Tax was not an easy decision, " Gigaba said in an interview after delivering his Budget Speech to Parliament in Cape Town on Wednesday.

Higher taxes will raise an additional R36bn in the year through March 2019 and be coupled with budget cuts totalling R85bn over three years.

Ratings agency Fitch‚ which considers South African debt as junk‚ said earlier SA's budget has reversed some of the fiscal deterioration seen in 2017 - particularly during the medium-term budget policy statement.

"The budget was probably enough to avoid another downgrade, at least for now", said John Ashbourne, Africa economist at Capital Economics in London.

The budget underscored some of the challenges for Mr. Ramaphosa. Analysts forecast this year's growth will jump to 1.8 percent.

But treasury officials sought to project a relatively optimistic outlook as they assessed economic prospects for the immediate future.

For one, South Africa has thus far not approached the sea, with the economy it offers, in the same way as it may do for land-based economies.

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As Gigaba read his budget speech, the rand ZAR=D3 extended gains to 0.81 percent against the dollar, government bonds firmed and retail shares on the stock exchange fell.

That is barely in line with population growth and far short of the 3% expansion for 2018 Mr. Ramaphosa had envisaged when he campaigned to become ANC leader previous year, and of the 5% growth he had foreseen for the period after 2023.

Better sentiment since Ramaphosa took over leadership of the ruling party, and the government, is expected to help lift economic growth.

The budget's proposals to generate an additional 36 billion rand in tax revenue will be essential to fund free university education for students from low-income families - a policy abruptly announced by Zuma on the eve of his departure from the ANC presidency a year ago.

SOUTH African president, Cyril Ramaphosa, would ensure families of 44 miners who died during clashes with police during the Mariakana platinum protests of 2012 would be compensated, said BusinessLive citing comments made by Ramaphosa.

After the speech, Gigaba told Reuters: "We will be able eventually perhaps in 18 months to 24 months to return to investment grade".

This has been seen clearing the way for far reaching economic and political reform, with an emphasis on corruption in government and governance of state owned enterprises. "The population was given a crash course in democracy, legal systems, the economy, state-owned companies and how safeguards failed us".

Other reports by MaliBehiribAe

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