South African budget plans may prove too ambitious

Significance

However, the MTBPS relies even more heavily on getting powerful public-sector unions to agree to unprecedented wage freezes over the next three years, putting its credibility in doubt at a time when Pretoria urgently needs to win back the confidence of investors.

Impacts

• The risk is rising that the country could be forced to go to the IMF for a full structural adjustment programme within a couple of years.
• Funds for South African Airways (SAA)'s rescue will not cover the cost of creating a new carrier, which depends on strategic investment.
• The spending cuts could weigh further on poor-quality delivery of public services and may also dampen an economic recovery.