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Johannesburg - South Africa has chosen job creation over fiscal discipline, an economist said on Wednesday.
"Meeting the seemingly conflicting objectives of job creation and fiscal consolidation was always going to be difficult, and South Africa has clearly opted to focus on the former," said Razia Khan, Standard Chartered Bank regional head of research, Africa.
"With a relatively well-established reputation for fiscal management, South Africa has in a sense earned itself the fiscal space to do so," she said of Finance Minister Pravin Ghordan's budget speech.
Fiscal policy refers to how the government uses its expenditure and taxes to influence the economy.
Khan said the budget had not delivered on expectations that there would be a narrowing of the deficit over the medium term.
"Not only is the budget deficit estimate for financial year 2011, the current fiscal year, unchanged, but the years ahead will see a far more gradual narrowing of the budget deficit than had been planned last October," she said.
There had also been an expectation that measures would be announced to weaken the rand exchange rate.
"The headline takeaway here, with everyone expecting perhaps further measures to weaken the ZAR (rand), is that nothing new has been announced."
Nedbank economist Dennis Dykes said there were no surprises.
"The budget did not carry much by way of surprise. However, what was interesting to me was an upward revision in the country's budget deficit of 5.3% from the previous estimate.
"The national health insurance scheme is also going to be expensive, hitting the middle- to upper-income groups. Revenue estimates for 2011-12 were also relatively conservative."
Gina Schoeman, economist at Absa Capital, said: "National Treasury once again succeeds in instilling confidence into the SA economy with a powerful budget speech."
There was nothing "too dramatic" on the tax side of the budget, said Deloitte tax director Billy Joubert.
Joubert added that the personal tax cuts totalling R8.1bn across all income brackets were "not very generous".
"Meeting the seemingly conflicting objectives of job creation and fiscal consolidation was always going to be difficult, and South Africa has clearly opted to focus on the former," said Razia Khan, Standard Chartered Bank regional head of research, Africa.
"With a relatively well-established reputation for fiscal management, South Africa has in a sense earned itself the fiscal space to do so," she said of Finance Minister Pravin Ghordan's budget speech.
Fiscal policy refers to how the government uses its expenditure and taxes to influence the economy.
Khan said the budget had not delivered on expectations that there would be a narrowing of the deficit over the medium term.
"Not only is the budget deficit estimate for financial year 2011, the current fiscal year, unchanged, but the years ahead will see a far more gradual narrowing of the budget deficit than had been planned last October," she said.
There had also been an expectation that measures would be announced to weaken the rand exchange rate.
"The headline takeaway here, with everyone expecting perhaps further measures to weaken the ZAR (rand), is that nothing new has been announced."
Nedbank economist Dennis Dykes said there were no surprises.
"The budget did not carry much by way of surprise. However, what was interesting to me was an upward revision in the country's budget deficit of 5.3% from the previous estimate.
"The national health insurance scheme is also going to be expensive, hitting the middle- to upper-income groups. Revenue estimates for 2011-12 were also relatively conservative."
Gina Schoeman, economist at Absa Capital, said: "National Treasury once again succeeds in instilling confidence into the SA economy with a powerful budget speech."
There was nothing "too dramatic" on the tax side of the budget, said Deloitte tax director Billy Joubert.
Joubert added that the personal tax cuts totalling R8.1bn across all income brackets were "not very generous".
