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South Africa presents a much anticipated budget

Ⓒ AFP – RODGER BOSCH – | New South African President Cyril Ramaphosa in Parliament on February 20, 2018 in Cape Town

The South African Finance Minister was to present Wednesday an expected budget and probably very tight, after the election of the new president Cyril Ramaphosa who has made the recovery of the economy and the fight against corruption his priorities.

Cyril Ramaphosa succeeded last week President Jacob Zuma, entangled in several scandals and forced to resign under the pressure of his party, the African National Congress (ANC).

The ANC pushed him towards the exit in order to avoid a catastrophe in the general elections of 2019.

The election of Cyril Ramaphosa to lead the continent’s largest industrial power was greeted with relief by the markets, while the Zuma era was marked by rising debt, sluggish growth, record unemployment 27.7% and a deterioration in the country’s financial score.

But the task of Cyril Ramaphosa promises to be complicated.

“It’s going to be the toughest budget since the advent of democracy” in 1994 in South Africa, predicted Piet Naude, a professor at Stellenbosch University.

President Ramaphosa will have to find sources of income while drastically reducing state spending, while he has committed himself to respect one of the most expensive commitments of his predecessor, namely free education higher education for students from disadvantaged families.

Ⓒ AFP – Damien GAUDISSART – | South Africa

In a speech to Parliament Friday, the day after his election, he promised to commit the country to “a new path of growth, employment and transformation.”

Among his immediate priorities, he cited youth employment, whose unemployment rate is close to 50%. He also pledged to restore the confidence of investors and markets, which sanctioned the end of the reign of Jacob Zuma by the degradation of the country’s financial score.

Shortly before his accession to power, Cyril Ramaphosa had expressed his reluctance on a very expensive and controversial project to build new nuclear power plants in South Africa, ardently defended by Jacob Zuma.

Cyril Ramaphosa, a former businessman, has immediate market confidence that “thinks he’s good for the economy,” says Ken Swettenham, a financial analyst for Liberty Life.

Since his election, the national currency, the rand, has recovered.

But the honeymoon could be short-lived if the changes do not materialize quickly.

President Ramaphosa is still working with Jacob Zuma’s team. He said on Tuesday that he would announce a new government “when the time comes”.

In the absence of immediate reshuffle, it is therefore the Minister of Finance, Malusi Gigaba, ally of Jacob Zuma, who will present the budget in Parliament on Wednesday at 14:00 (12:00 GMT),

It is likely that he will not survive the government reshuffle, but the fact that he presents the budget “does not give signal to international markets that there is a credible change of course,” Co-Pierre Georg warned. , University of Cape Town.

South Africa grew by 0.9% last year, compared with 0.3% the year before. Analysts expect growth of 1.8% for this year and inflation below 4%.

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