Rand, bonds firm as medium-term budget shows commitment to cost cutting, fiscal discipline | Business

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South African flag and South African Rand cash bills and coins (money, economy, business, finance, inflation, crisis)

South African flag and South African Rand cash bills and coins (money, economy, business, finance, inflation, crisis)

The South African rand firmed on the release of the medium-term budget on Wednesday, with National Treasury indicating its commitment to fiscal discipline, curbing spending on embattled state-owned companies and planning the merging or closure of non-critical government entities.

In the face of a multitude of pessimistic revisions, the medium-term budget presented a “pragmatic outlook,” acknowledging the current circumstances, underscoring potential risks, and placing a strong emphasis on the imperative for fiscal consolidation, Johann Els, economist for Old Mutual, said in an emailed note.

National Treasury revised its estimate for gross tax revenue down by R56.8 billion and increased its forecast expenditure to R2.262 trillion from R2.168 trillion for the 2023/24 period, with the deficit on the current account expected to widen to 2.4% in 2023 from 0.5% last year, according to the medium-term budget.

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