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The budget reflects President Cyril Ramaphosa’s attempt ahead of the May 2019 elections to try to balance pleasing the markets with pleasing his trade union allies on the left and populist opponents within the party aligned with his predecessor, Jacob Zuma. The latter demand the impossible: state-owned enterprise (SOE) restructuring without job losses, without new equity partners and without cutting black economic empowerment contracts with dodgy politically connected suppliers. The accumulated annual cost of SA’s dysfunctional SOEs, in terms of jobs losses, deterring investment and reducing economic growth, are now so huge that they are a threat to the country’s economic sustainability. Without drastic reforms SOE debt is likely to force the country to seek a bailout from the World Bank and International Monetary Fund. Failing SOEs have a combined debt of close to R2-trillion. The gross debt estimate for the 2018/2019 fiscal year was recently revised by the Treasury to 55% of GDP, ...

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