Finance Minister Tito Mboweni tabled his R1.95 trillion Budget in Parliament on Wednesday.
In an attempt to save billions of rand, Mboweni announced major cuts to salaries and benefits in the next three years in the public wage bill by 1%.
He also announced no major tax increases, and instead gave taxpayers relief to the tune of R2 billion.
What are the practical implications for this budget?
Eusebius McKaiser facilitates a discussion on Mboweni's budget with Investec chief economist Annabel Bishop, political analyst and broadcaster Karima Brown as well as Deloitte SA tax partner Kabelo Malapela.
I was fascinated by this budget from a political analysis point of view because I thought it incredibly braved some of the choices that the entire government had made, like deciding it was not compulsory to raise taxes and find other ways to stimulate the economy.— Eusebius McKaiser, Presenter
Malapela says she was surprised by the overall budget that Mboweni delivered.
Because generally, to deal with a deficit, raising taxes is the natural inclination. Everyone was expecting it and then the minister comes on and does nothing about corporate taxes and gives back to individuals. I was surprised, now you have not raised taxes but you are still in a deficit, how do you plug that hole?— Kabelo Malapela, Tax partner - Deloitte SA
Brown says her first takeaway from the speech was that it appeased the rating agencies but a showdown looms with unions.
For me, the African National Congress is betting on the black middle class to regain its position that it has lost in the polls. This is a very risky strategy.— Karima Brown, Political analyst and broadcaster
Bishop concurs with the others and says she was surprised by the budget.
It would have been silly to push up VAT but at the same time expect the civil servants to pay more VAT and use that money to give them salary increases.— Annabel Bishop, Chief economist - Investec
Listen below to the full analysis and reaction on Mboweni's budget speech: