Cautious optimism in medium term budget

Labour federation Cosatu is however worried that the proposals are not bold enough

- Brian Sokutu

Finance Minister Enoch Godongwana sounded an optimistic tone in his medium-term budget policy statement (MTBPS) this week, saying revenue this year was expected to come in at a better than expected R19.7 billion, one of the signs of an economy slowly on the mend.

"As we table this policy statement, we have reason to be optimistic about the future of our country," Godongwana told Parliament on Wednesday, while cautioning against complacency.

He drew his optimism partly from the fact that the medium term budget did not face the same opposition from partners in the government of national unity which delayed the passing of the main budget earlier this year and forced Godongwana to scrap a planned VAT increase.

"Our optimism is rooted in the progress we have made in keeping the promises we set out. A promise to grow the economy faster, to strengthen public finances, and to improve life for all South Africans. Two years ago, we committed to stabilising public debt in the current year and then begin to reduce it," he said.

Earlier this year, the central bank said it would focus on the 3% mark as opposed to 4.5%, the mid point of its previous 3-6% target band, saying that internal and external analysis had shown that "our inflation target is too high and too wide".

On Wednesday Godongwana said the one percentage point tolerance band provided flexibility to "accommodate any unexpected inflationary shocks".