Thunder, lightning and soccer aside, it was a budget that attempted to look beyond the storm -- not only the global financial storm but also the local political one.

That was most evident, in a way, on the spending side of the medium-term framework. What was striking about it was the extent to which spending growth is seen slowing over the next three years. That is a response to the constraints that global turbulence and slower domestic growth will impose. But, crucially, it also leaves space for a new administration to make its own decisions about how fast it can grow government spending and on what.

Over the past five years, government spending has been increasing strongly in real, inflation-adjusted terms, as Manuel has taken advantage of buoyant revenue growth to allocate more to meet social and economic needs. But he had already started applying the brakes a year ago, slowing budgeted real spending growth to just over 6% a year over the medium term, from the 10% averaged since 2002- 03. Now that drops to about 5% over the three years to 2011- 12 -- but what that average hides is that after a spike next year, when R30bn will go to Eskom, and spending jumps by 11,5% in real terms, the rates of increases in the next two years slow to 2,7% and 2,1%. Taking Eskom out flattens the trend but, even then, real spending growth in the outer two years is in the 4% range.

Depending on what happens to the economy and to revenues, it might well be possible for the new administration to be a bit more expansionary by then, without being fiscally imprudent. Manuel has left that space open. Open too are many of the details of what money will be spent on. Because although yesterday's policy statement was clear about spending priorities and rich in rhetoric about what mattered most, it was short on specifics. That is in part because the medium-term policy statement is meant to be just that -- a policy statement, not a budget. The main budget next year will spell out more of the spending details. But it will be up to the new administration to take it further.

Not that that necessarily means big changes. The spending priorities set out yesterday were pretty much in line with the African National Congress's Polokwane resolution on economic policy.

The largest new items on yesterday's spending list were in line with the ANC's priorities -- R4bn will be allocated to boosting the expanded public works programme, in line with the emphasis on job creation, while spending on the school nutrition programme will increase from R1,9bn to R4,6bn over the medium term and R4bn will be added to the municipal infrastructure grant, to expand the provision of basic services such as public transport, electricity, water and sanitation. And in terms of spending growth over the next three years, it is items such as housing, crime-fighting and education that are set to grow the fastest. But the composition of the spending, with its increasing emphasis on investment, not just consumption, also reflects the effort to look beyond the storm. The government's own investment spending is expected to grow by an average 7,3% a year over the medium term.

There has already been a significant shift in the fiscal mix from current spending (on salaries, grants and so on) to capital (investment spending). Capital spending has already risen from 6,3% of total spending in 2004-05 to 9,3% by 2007-08 and it is expected to reach 11% by 2011- 12.

It is being spent on built-environment infrastructure such as housing and transport, as well as social infrastructure such as schools and health facilities, network infrastructure such as broadband connectivity, and improving facilities in departments such as home affairs.

More investment spending means some of the extra revenue that is being collected as a result of cyclical factors such as the commodities boom is being invested to provide the basis for future growth, rather than simply being used to finance recurrent spending. But the macroeconomic importance of the shift is also that even though the government continues to spend more, and is planning to run deficits rather than the surpluses it had planned for when times were less stormy, it is not eroding SA's savings. It is only if the government is borrowing to finance current spending that it is considered to be dissaving, not if it is investment spending.

The savings issue matters because of SA's large current account deficit, which makes it particularly vulnerable to the gyrations of international markets. The treasury predicts a large current account deficit, that rises to nearly 9% in two years' time. The deficit reflects the fact that SA's domestic savings fall way short of its investment and, in recent years, the government has worked successfully to become a saver, instead of the dissever it was for decades, so that it can contribute to the national savings rate. Now that Manuel is budgeting for deficits in the next couple of years, the government will not be contributing much to SA's savings. But at least it's not eroding them. And that's important to getting through the storm.

The storm will affect revenues and spending, with lower commodity prices and slower growth cutting tax collections, while higher inflation is driving up the cost to the fiscus of public sector salaries, as well as of social grants and of items such as fuel. So the surpluses Manuel had been budgeting for become deficits. On a consolidated basis, this year is still in surplus, though only just, but next year's budget balance swings into a 1,6% deficit, followed by a 1,1% deficit the following year. Looking at the main budget alone, we're due for deficits this year and for the next three , peaking at 2% in 2009-10.

Manuel emphasised that the government had not budgeted for surpluses because of a particular ideological position but because it was the right thing to do in the economic circumstances. "And in time to come as we revert to a budget deficit ... it will not be because we have adopted a new economic creed but it will again be because it is the right thing for changed economic circumstances."

This is not, in other words, about populism versus conservatism, or Gear vs Polokwane. It is, essentially, because a surplus is no longer warranted in a climate in which the economic growth rate has slowed from the 5% of the past four years to the 3% range. And even that is not certain. But the point about fiscal prudence is that it builds space, so that if an economy gets kicked in the teeth, the government is still in a position to deliver on its spending promises even though it has to borrow to do so. SA's public debt ratio, especially its foreign debt, is extremely low and the disciplined fiscal policies of the past decade have brought its borrowing costs right down. So if it has to borrow more, it can do so without too much strain on the balance sheet of SA Inc.

Manuel spent some time yesterday pointing out to Parliament the way in which the policies of the past decade were helping SA to weather the global storm -- and not only fiscal policy but also the way SA has conducted its monetary policy and regulated its financial sector. It was a powerful reminder to the new administration to keep the weather in mind and hold on to the umbrellas.

Joffe is senior associate editor.