Finance Minister Pravin Gordhan, delivering his maiden budget speech
The optimistic tone saw the rand trading stronger minutes after the minister started delivering his maiden budget speech to the National Assembly.
On monetary policy there was nothing to scare the markets either as Gordhan dashed any hopes the left had that inflation targeting would be abandoned, or steps taken to tame the volatile currency.
The SA Reserve Bank would continue to pursue a target for consumer price inflation of three to six percent, he said, and predicted that it would drop back inside the range this year.
"Governor [Gill] Marcus and I have agreed that monetary policy should be conducted in a consistent and transparent manner within a flexible inflation targeting framework.
"We are agreed that we need a stable and competitive real exchange rate, though in today's world this cannot be translated into a straightforward fixed price of the rand."
Gordhan also assured the country of the central bank's independence.
He warned that South Africa's job crisis would not be resolved easily or soon - the tentative recovery was expected to yield only one million jobs over the next five years while massive infrastructure spending could add 4.5 million short-term work opportunities.
"There are significant improvements in the economic outlook, but not yet enough to address our challenges of jobs, growth and poverty reduction."
He pointed out that unemployment among the youth had hit 48 percent --nearly double the official rate - and said a policy paper would be unveiled at the end of March to implement a two-year wage subsidy to encourage companies and municipalities to employ inexperienced young people.
"The most urgent focus of policy change must be interventions to put young people to work. Our preliminary estimate is that about 800,000 will qualify."
The minister put the projected deficit for 2010/11 at a fairly optimistic 6.2 percent for GDP, but warned that the spate of higher state borrowing taking South Africa from a budget surplus to a record deficit was not sustainable.
"Higher government borrowing is only a temporary solution to our economic challenges."
He called for lower wage-inflation, lower budget deficits, larger reserves and a more flexible and dynamic economy to support the long-term competitiveness of the real exchange rate.
"At present our level of inflation is higher than that of our trading partners, which lowers our competitiveness."
Gordhan told public servants to moderate their pay demands after generous 2009 wage increases had almost put "immense pressure on the budget". He suggested that state-owned enterprises would face far greater discipline after a costly rash of bailouts in recent years.
Despite a revenue shortfall of R69 billion, the minister gave South Africans a small windfall of R6.5 billion in tax relief by adjusting personal tax brackets and raising the level of interest-free earnings on savings. He however upped fuel taxes a hefty 25.5 cents a litre.
However, tax hikes were likely in coming years, he warned.
"We may have to raise taxes in future to fund our public spending commitments."
Education will continue to get the lion's share of public money, while spending on fighting crime is expected to rise to R60.4 billion over the next three years, with the hiring of thousands of additional officers.
RMB currency strategist John Cairns called Gordhan's speech "as rand friendly as it could get".
Opposition parties and the ANC praised him for playing it safe and providing clarity on monetary policy.
ANC secretary-general Gwede Mantashe said Gordhan had clarified a "sticky point" - the SA Reserve Bank's mandate and independence.
Congress of the People parliamentary leader Mvume Dandala lauded Gordhan for "sticking to a formula that had worked".
"Minister Gordhan placed great emphasis on galvanising the people," Dandala said. "We congratulate him for that."
Cope spokesman Nic Koornhof said he was happy to have seen some leadership from the finance minister.
"He put to bed the whole debate about the reserve bank, the value of the rand and he is sticking to the inflation targets. That's good news for the macro-economic policies of South Africa".
Cope was also concerned about debt levels.
"In 2015 we will go to debt of close to 43 percent of GDP - R1.3 trillion - that's too high. If you added the debt of the semi-state institutions, we will get close to 50 percent and the International Monetary Fund has warned emerging markets not to touch that level."
Democratic Alliance leader Helen Zille said "there was much more to welcome than to criticise" and singled out his focus on putting young people in jobs. She said it was time to privatise state-owned enterprises.
Sapa
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