Bonds - Happy but hard to get
It did not take long for bond market traders to grasp that finance minister Trevor Manuel had delivered an incredibly bullish budget for long-term interest rates. With the bit between its teeth, the yield on the R153 bond responded with an immediate seven basis point decline, taking it to 7,1%, the lowest level a benchmark government bond has traded at since July 1969.
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By Invitation - Duty-free zones would have helped
Last week deputy president Phumzile Mlambo-Ngcuka made a speech that caught the market by surprise with its comment that the SA currency had strengthened "beyond desirable levels". Back in 2000, the currency depreciated so rapidly that a commission of inquiry was convened to find reasons for the abrupt and unexpected decline. How things have changed.
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Welfare - War against poverty continues
Social security will again be the fastest-growing category of government expenditure in the budget - a trend that began in 2001. It is one of the largest categories of spending, second only to education.
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Company taxes - No tax cuts, but RSC levies to go
Much to the chagrin of business, finance minister Trevor Manuel did not announce a cut in the company tax rate. Instead he focused on more specific measures affecting the corporate sector.
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Capacity - Bricks and brains
A growing economy needs two types of capacity: infrastructure and human capital. Government's growth strategy focuses on both. Massive resources are being poured into infrastructure investment - the treasury infrastructure database has about 15 000 entries and provincial files a further 1 000 projects.
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Exchange controls - Manuel persists with his gradual relaxation approach
The only two changes made to exchange controls in this budget were the increase in the offshore foreign currency allowance for individuals from R750 000 to R2m and the lowering of the percentage that SA companies and parastatals have to buy of a company if they are investing elsewhere in Africa.
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BEE/SME - Feel free to join us in the legitimate lane
Because they operate only with cash, many of SA's estimated 97 000 taxis see no need to join the tax system. It is estimated their absence from it costs the exchequer billions of rand each year. Now finance minister Trevor Manuel hopes an amnesty will make them see the error of their ways.
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