Finance Minister Pravin Gordhan made an "impressive" maiden budget speech, FNB chief economist Cees Bruggemans said on Wednesday.

"The minister had to take into account widely varying interests and views of many groupings in society against a terrible global backdrop," Bruggemans said.

Importantly, the inflation target for the SA Reserve Bank (SARB) had been left unchanged at three percent to six percent.

SARB policy was described as flexible and if necessary deviating to take into account exceptional circumstances, Bruggemans said.

Forex reforms

He said there seemed to be exchange control reforms on the way, linked to the prudential approach already in place.

"An interesting remark was the point that the public sector wage bill has nearly doubled in five years and that more moderate increases should be expected in years to come."

Bruggemans said that in addition to the 25.5 cent a litre increase in the fuel levy and increases in sin taxes and reduced travel allowance benefits, an impression was created that hefty increases in public sector tariffs and charges, starting with electricity, lay ahead next week.

Infrastructure charging burden

Gordhan had not have raised income, VAT and corporate tax rates, and had even given a partial inflation adjustment albeit retaining some of this through higher specific taxes.

The real burden this year would come from infrastructure charging, Bruggemans said.

He said households would not escape having their real disposable incomes burdened this year.

Neither would companies escape having their costs increased, feeding into inflation and wage demands, with implications for company earnings, employment prospects and interest rates.

Compassion for poor

"The minister may have been accommodative, and the economy in recovery, but for many the times will remain tough, particularly the working and middle classes that form the backbone of our modern economy."

Bruggemans said that - as always - great compassion was shown for the poor in the way the income tax tables were changed, with two million more children this year qualifying for child support, and R7-billion allocated extra to municipalities to shield the poor from coming electricity and water tariff increases."