Finance minister Tito Mboweni’s maiden budget speech is an exercise in structural reform, aimed at reducing the immediate fiscal and economic risks posed by Eskom and other state-owned enterprises’ (SOEs') unsustainable balance sheets and operational models. Without a doubt the fiscal numbers show a marginal deterioration when compared with the 2018 medium-term budget policy statement (MTBPS), and a little more than that if we compare with the 2018 Budget Review. The consolidated budget deficit for 2018/2019 slips to 4.2% of GDP from the 2018 MTBPS’s forecast of 3.6%, rising to 4.5% of GDP in 2019/2020 before moderating to 4% by 2021/2022. The debt-to-GDP ratio now stabilises at 60% of GDP in 2023/2024, which is slightly higher than the 59.6% previously projected. These decimal-point deteriorations are a necessary slippage to allow reform packages that will create a more stable and predictable operating environment. Our overall assessment is that this was a tough budget but it is re...

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