With significant tax hikes, big cuts to expenditure, faltering tax collection and a narrative of risk, this year's national budget is former president Jacob Zuma's last big gift to his beleaguered country.
It is, frankly, a dog of a budget delivered by Finance Minister Malusi Gigaba today that reverses important trends until now managed with dexterity by successive ANC governments: growth with tax moderation and higher spending.
This is a tax, tax, tax budget with reduced social spending and debt repayments that almost outstrip spending that can lead to social justice and a thriving economy. Almost all South Africans will emerge poorer from the budget and the macro-economy is only stronger because there is clarity of political purpose, not because the fundamentals are strong.
This is a tax, tax, tax budget with reduced social spending and debt repayments that almost outstrip spending that can lead to social justice and a thriving economy.
But the Treasury team has put together a public finance narrative so searingly honest that it gives President Cyril Ramaphosa the space to put in place a Cabinet of his choice and to make the necessary economic reforms.
In addition, he can capitalise on a political premium he now enjoys as a new broom.
Price of state capture
The price of state capture and cronyism that were the hallmarks of the Zuma years is writ large in the Budget – you could almost hear the former president's chortle as Finance Minister Malusi Gigaba grappled with difficult trade-offs.
* State capture has carried a cost that former finance minister Pravin Gordhan calculates at about R100-billion. The cost of this is state-owned companies that have pressured the national balance sheet and accelerated the state's contingent liabilities. An example is how Zuma appointed his associate Dudu Myeni as SAA chairperson. Her mismanagement caused the airline to lose R5.6-billion in 2014/15 and R1.5-billion in 2016/17 – this was paid in bailouts.
The Budget says that "poorly governed and administered entities, however, burden the country with the substantial costs of operational inefficiency and financial mismanagement."
* Zuma put a bombshell under the fiscus when he announced an unplanned and unbudgeted fee-free plan for tertiary students from homes with a household income of R350,000 and under on the eve of the ANC national conference in December. The Budget has allocated R56-billion to this line but the costs come in cuts of R85-billion from other expenditure. The budgets for passenger rail, water boards, school building, housing, electricity and other forms of public transport were all cut to pay for free fees.
* At the SA Revenue Service (Sars), Zuma appointed Tom Moyane against the advice of former finance minister Nhlanhla Nene. The price of that decision is R48-billion – the hole in the budget after lower-than-anticipated tax-take. Not all of this is the problem of weakened tax administration, but it is enough of a problem for Ramaphosa to have announced a commission of inquiry into Sars in his state of the nation speech last week.
* South Africa has managed to keep the value-added tax rate relatively low compared with similarly sized economies, but now that has been increased to fund a hole in the budget. Would it have been necessary if not for the spectacular mismanagement under the Zuma administration?
Gigaba believes the Budget sets the right tone. "I am very optimistic about South Africa's growth prospects. There's a positive mood in the economy. There is enough in there to stave off [negative] rating agency decisions," says the finance minister. He adds, "The budget must be looked at in its totality; not as individual line items like the VAT increase. It's a broadly positive story of change."
The budget will probably be read as a broadly positive story of change because the mood in South Africa is so palpably different to when Gordhan delivered his final budget last year this time.
Then, the forces of capture were on the prowl and he was a hunted man. Zuma was at the apex of unrestrained power.
Those forces have been beaten back now and the fact that sensible hands are back on the tiller is evident in Budget 2018 despite its harsh top-lines.
There are clear efforts to reduce the deficit to a manageable 3.5 percent by 2020/21 and to stabilise debt at 56.2 percent of GDP in 2022/23 and to manage it down. The global economy is more conducive to South Africa's stimulatory efforts.
And there is the Ramaphosa effect: by engineering changes to the Eskom board and by taking the impassé about the mining charter out of court and back to the negotiating table, the president has indicated a new pragmatism and commitment to reform.
What could very nearly have been a banana republic falling off the fiscal cliff has been retrieved to become again a land of green shoots.