In what was tipped as the most crucial budget statement in the history of a democratic South Africa, Finance Minister Tito Mboweni insisted that austerity was not on the government’s agenda.

As the country looks to emerge from the economic chaos wreaked by the coronavirus pandemic and a pre-existing quandary of debt and structural weakness, Mboweni said his plan was on target to return South Africa to a primary surplus on the government’s main budget in 2024/25.

Despite Mboweni’s assertions that this was “not an austerity budget,” experts are not entirely convinced, and worry that the finance minister may have been overly optimistic in his prognosis for the country’s economic overhaul.

Virag Forizs, Africa economist at Capital Economics, noted that despite the increased revenue expectations, bolstered further by increased duties on alcohol, tobacco and fuel, the government did not seem to be using the headroom to water down its fiscal tightening.

“On the expenditure side, restraint seems to be the order of the day. Allocations to fund the country’s vaccination campaign, up to ZAR19bn (19 billion South African rand), were below earlier Treasury estimates,” she said in a note Wednesday.

South Africa’s fiscal position for the last financial year is looking slightly rosier than expected, with government revenues projected to be 1.4% of GDP higher than expected in October. Looking ahead, revenues for 2021/22 are predicted to come in at 1.35 trillion South African rand ($90.46 billion), rising to 1.52 trillion rand in 2023/24, with stronger revenues and cash balances enabling the government to fund deficit reduction.

‘Dangerously overstretched’
Mboweni also announced that the government will scrap a planned 40 billion rand in tax increases, instead raising tax revenues by closing corporate sector loopholes and broadening the tax base. It has also allocated an extra 10 billion rand to the purchase and distribution of Covid-19 vaccines over the next two years.