Johannesburg – Early in his Budget Speech Finance Minister Tito Mboweni emphatically stressed that “this is NOT an austerity budget”.
Clearly this was meant for market participants to take note and it appears that they did.
The rand held steady through the entire speech, having gained about 0.9% against the dollar in intraday trading.
Mboweni noted that the state of the deficit does remain dire and we are recording the biggest tax shortfall in SA’s history, which is obviously worrisome.
The cost of debt is also growing rapidly, representing a risk factor.
Also read: Budget2021: Mboweni says SA’s finances are ‘dangerously overstretched’
The local unit dipped towards R14.50/$ level after the speech, but a still maintained an overall positive response to the Budget.
By Bianca Botes, Executive Director at Citadel Global.
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