The National Treasury has pulled another rabbit out the hat, and not irresponsibly. The market certainly thought so: the rand strengthened and bond yields dropped in the wake of finance minister Enoch Godongwana’s budget speech on Wednesday — two firm signs that financial markets have given the budget a stamp of approval.

Let’s start at the beginning. We focus on the budget to see whether the deficit has deteriorated or improved. This year, the main budget deficit is largely unchanged against what we saw in last year’s medium-term budget policy statement. That means the Treasury is still certain that the budget deficit will end this fiscal year at -4.7% of GDP, narrowing to -3.4% in three years’ time. ..

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