IntroductionThe global economy continued on an uneven recovery path in 2011 and the first half of 2012, with the buoyancy experienced in the emerging-market economies being in sharp contrast to the hesitancy observed in the developed economies. Concerns about fiscal sustainability and the health of the financial sector continued to plague the euro area, with austerity measures aggravating the unemployment situation and lack of growth in the region. With no fiscal parallel to the high level of monetary integration in the euro area, decisions regarding the nature, magnitude and timing of, and conditions for, support to the troubled peripheral European economies were difficult to take and implement. Furthermore, the frictions that inevitably arose resulted in disillusionment among the electorate, in several instances leading to a change of government following elections held. This introduced additional uncertainty regarding the orderly and timely resolution of the euro area’s problems, raising risk premia on financial instruments issued by peripheral European governments – which, in turn, raised borrowing costs and further aggravated concerns about sustainability. In the United States (US) raising the limits set for government debt became an important political issue in 2011, with a political agreement only reached at the eleventh hour. One of the credit rating agencies subsequently downgraded the sovereign debt of the US. Monetary authorities in the developed economies maintained exceptionally low interest rates to support economic activity and also continued with unconventional measures to bolster liquidity in the financial markets. Under these circumstances, and with continued growth in emerging-market economies, international commodity prices remained in firm territory but were, to some extent, dampened by the lacklustre progress of the developed economies and projections of slightly less buoyant growth prospects for China. However, concerns about crude oil supply interruptions in the wake of the so-called Arab Spring led to high levels of the oil price with a peak of more than US$125 per barrel registered in early 2012 before receding to below US$100 per barrel by the middle of the year. Overall, global inflation was fairly well contained as the world economy continued to be characterised by a fair amount of surplus capacity, alongside the easing of the supply chain bottlenecks that arose after the March 2011 earthquake and tsunami in Japan, and the dissipation of some of the food price pressures of the past year. In the past 18 months the South African economy continued to function significantly below full capacity, although in a number of areas bottlenecks visibly inhibited economic progress. The National Planning Commission released a vision statement and development plan for the country in November 2011, targeting the elimination of poverty and reduction of inequality by 2030 through appropriate changes, hard work, leadership and unity. Having identified the key developmental challenges facing the country and its people, the commission developed a plan focusing on – the creation of jobs;– improving South Africa’s infrastructure;– appropriate transition to a low-carbon economy;– an inclusive and integrated rural economy;– reversing the spatial effects of apartheid;– improving the quality of education, training and innovation;– providing quality healthcare for all;– social protection;– building safer communities;– reforming the public service to build a capable state;– eliminating corruption; and– transforming society and uniting the country. Addressing the infrastructure bottlenecks was recognised as of particular importance. In 2011, to ensure timeous and effective implementation in this area, Cabinet created the Presidential Infrastructure Co-ordinating Commission, chaired by the President and including half the members of Cabinet, the nine provincial premiers, and the mayors of the metropolitan areas. The President underlined the need for speeding up the capital programmes of the public sector in his State of the