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Home » Minister Godongwana’s MTBS: Insights Part 2

Minister Godongwana’s MTBS: Insights Part 2

Compiled and edited by Eamonn Ryan

The first fiscal policy statement since the formation of the Government of National Unity (GNU) in June 2024 was tabled 30 October 2024. This is Part 2 of a three-part series.

In the view of the Banking Association, the MTBPS was subdued.
In the view of the Banking Association, the MTBPS was subdued. Supplied by SA Reserve Bank

…continued from Part 1.

Investor confidence

According to the Banking Association South Africa, the MTBPS succeeded in putting in place the policies needed to turn increasing confidence in South Africa into investment opportunities in the economic infrastructure discussed above, stating:

 

  • Policies that promote increased opportunities for meaningful investment partnerships with business in vital economic infrastructure have been set out.
  • The MTBPS continues to strengthen responsible fiscal management in South Africa; with government continuing to focus on reducing debt to a sustainable level. Government remains on track to achieve a primary budget surplus, which will further boost investor confidence.
  • Government remains committed to protecting the social wage, to provide necessary social support and security to vulnerable South Africans. Social stability is an important part of consumer, business and investor confidence.

In the view of the Banking Association, the MTBPS was subdued, but the lack of big-ticket spending and bailouts for state-owned enterprises showed that government has the political will to get its finances in order. Rather than spend inefficiently, it has committed to deliver on policy reforms that are necessary to attract private sector investment and skills into vital economic infrastructure. This opens the way for partnerships with business to repair and replace water and transport infrastructure, and to improve local government operations and services – which threaten South Africa’s economic recovery.

A dedicated capacity to create a credible pipeline of projects that can be taken to market, as well as an improved capital budgeting process and the de-risking of public sector projects are essential to unlocking private sector investment in infrastructure. The association said that there is no investment strike in South Africa but concrete projects, policy certainty, the pragmatic and efficient implementation of regulation and legislation, and a growing economy, are all needed to attract investment.

Source:

  1. Minerals Council South Africa: “MTBS boosts infrastructure spend outlook, with mining set to benefit.”
  2. Banking Association South Africa: “The 2024 Medium Term Budget Policy Statement”

References:

  1. This is in line with the latest consensus from private sector economists for growth in 2024. For next year, the fact that Treasury’s growth forecast is at ‘only’ 1.7% highlights the scale of work required to get to the 3%+ upside growth scenario recently presented by the business sector and informed by modelling from the Bureau for Economic Research.
  2. World GDP per capita for 2023 was USD13,138, a 3.21% increase from 2022. https://www.macrotrends.net/global-metrics/countries/WLD/world/gdp
  3. Bulk mining refers to the iron ore, coal, chrome and manganese sectors. 
  4. The primary budget measures the difference between government revenue and non-interest government expenditure.

Continued in Part 3…

 

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