SA’s fiscal position is dire, but rather than try to spin the numbers in his maiden budget, finance minister Malusi Gigaba has laid the full extent of SA’s fiscal deterioration out in clear, precise terms. He scores 100% for transparency but given that SA’s fiscal deterioration is even worse than expected, the minister is unlikely to be rewarded by the financial markets or rating agencies. The rand and bond yields responded aggressively, the former diving by almost 25c to R14/$ before pulling back slightly just after 3pm. Bond yields rose from 8.86% to 9.1% within an hour of the speech and continued to climb. The main shock is that the projected revenue shortfall for 2017/18 is a staggering R50bn due to weak growth and tax collection. This translates into a cumulative R209bn shortfall over the next three years. As a result, the consolidated budget deficit is set to spike to 4.3% of GDP in the coming fiscal year, against a target of 3.1%, wiping out the last five years of fiscal prog...

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