After the medium-term budget in October last year, ratings agencies were sceptical that there would be a plan on the table to reduce spending by R160bn, let alone R261bn overall.

There is still some scepticism that the government can achieve the salary targets, but this step could buy us a stay of execution from Moody’s, which might make the final call that would push our sovereign ratings into full “junk” status at the end of this month.

Judging by how well the budget was received, with the rand appreciating in a global market concerned at the effects of the coronavirus, we may just dodge that bullet again.

It certainly won’t be easy, though, judging by the response of Fitch Ratings, which already rates our debt as junk. Fitch said measures to consolidate the budget rely heavily on hoped-for moderation in public-sector wages, “which might not materialise, adding further risks to SA’s deficit and debt trajectories”.

So yes, while we have been pleasantly surprised by the measures taken by the Treasury, there’s much work ahead.

Some detractors have called this an austerity budget; it isn’t. The Treasury, aware of the deteriorating health of the economy, did not seek to boost government revenues through higher taxes on individuals and companies. There was some talk of a VAT increase, which would have been the second in two years.

Instead, the minister mooted the possibility of reducing corporate income tax to bring us more in line with international norms. Such a move would make us a more attractive destination for foreign direct investment.

There’s a measure of comfort in the budget speech, but we still face the twin factors of persistently low GDP growth and the continuing saga around the funding crisis of state-owned enterprises (SOEs), particularly Eskom and SAA.

Over the next three years our SOEs will continue to be a weight on the state, to the tune of R129bn – money that could be better used stimulating the economy. Over the past decade we’ve supported them with about R162bn.

To steer this country off the fiscal cliff that we’ve remained so close to for the better part of the past decade, our life-support measures for these institutions must be phased out. Proper governance must be allowed to take root once again and a measure of financial stability must be achieved.

In trying to correct the mistakes of the past, we know the state as shareholder has sought to keep a close watch on the day-to-day running of these operations.

Its good intentions have on occasion served only to slow the progress in getting these businesses running, as the finance minister has pleaded, “as businesses”.

The sooner that comes to pass, the sooner the clouds will lift on the South African economy.

Mavuso is CEO of Business Leadership SA