S.Africa hikes sales tax in ‘tough’ post-Zuma budget

– ‘A credible turnaround’? –

Growth rose to 0.9 percent last year from a paltry 0.3 percent the previous year. Analysts forecast this year’s growth will jump to 1.8 percent.

The budget’s proposals to generate an additional 36 billion rand in tax revenue will be essential to fund free university education for students from low-income families — a policy abruptly announced by Zuma on the eve of his departure from the ANC presidency last year.

Under pressure to remove ministers closely allied with Zuma and blamed for aiding state corruption, Ramaphosa told lawmakers on Tuesday that he will announce a new cabinet at an “appropriate” time.

Gigaba, who is widely seen as a Zuma loyalist, jokingly asked Ramaphosa “how much time do I have, sir?” as he started to deliver his speech.

“Gugaba has this tainted history and the problem with him delivering the budget is that people know that he has been involved so intimately (with alleged corruption) and cannot signal to international markets a credible turnaround,” said Georg.

Since Ramaphosa was sworn in as president, the rand has strengthened, the bond market is at its best level in almost two years and local equities rose nearly four percent on Friday when Ramaphosa delivered his maiden State of the Nation Address.

“The markets believe Ramaphosa is good for our economy,” said Ken Swettenham, a financial analyst at Liberty Life. “There is positive sentiment.”

But opposition parties remained unconvinced.

“The budget hammers the poor and is a legacy of Jacob Zuma’s disastrous management of the economy of South Africa,” said opposition Democratic Alliance’s shadow finance minister Alf Lees.