Budget21: Reaction quotes from RMB Chief Economist Ettienne Le Roux

“Kudos to the finance minister for digging in his heels; instead of buckling under constant pressure to spend more, he remains steadfast in pursuit of fiscal discipline”.

“Spending restraint remains a more effective tool than tax hikes to help achieve debt stabilization. In this respect, withdrawing last year’s proposal to raise an additional R40 billion over the medium term through tax measures is welcome news”.

“Staying the course with regards to wage bill restraint is commendable. Growing the bill at 2% to 3% below projected inflation will take some doing, but it’s a crucial part of what’s necessary to turn the country’s debt trajectory around”.

“Setting a new trend of growing capex at faster rates than current spending is the correct one; it’s a more durable way to help reduce the country’s risk profile while simultaneously contributing to faster economic growth”.

“In the long haul a blended approach of spending restraint coupled with growth-boosting reforms remains South Africa’s best shot out of the fiscal quandary it’s in. Still, there’s no room for slippage either way”. A breach in compensation ceilings or GDP growth undershooting ambitious targets would quickly upset the apple cart.”

“Notwithstanding a slightly improved debt trajectory, debt service costs will still absorb around 21c of every R1 of revenue collected. This highlights the need for a long-term approach to sustainably lift revenue through growing the tax base which, in turn, won’t be possible without the successful implementation of growth-boosting reforms involving the government, business and labour, all pulling in the same direction”.

ENDS