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 3 of a three-part series.
Fighting financial crime
The Banking Association added that the minister correctly lauded the considerable progress that has been made in South Africa’s Action Plan to exit the Financial Action Task Force (FATF) grey list of countries that have weaknesses in their capacity to fight financial crime. Furthermore, the timely removal of South Africa from the grey list will not only reduce the compliance costs and complications of doing business with South Africa but will also strengthen the fight against crime and corruption in the country, to the benefit of all its citizens.
After its latest review, FATF concluded that South Africa has “largely addressed 16 of the 22 action items” required to ensure its anti-money laundering and terror financing capacity met international standards. However, the association highlighted that most challenging outstanding item is the sustained, successful prosecution of financial crimes. The creation of a “capable, ethical and developmental government” must include the further bolstering of the criminal justice system.
Although disappointed at the minor expansion of 1.1% in GDP in 2024 and forecast of 1.8% over the medium-term, the association said that there was hope that the economy might over-deliver. Given the real improvements in the business operating environment and investor sentiment, South Africa’s economic outlook is the best it has been for many years.
Despite the fact that GNU has so far shown a better ability to improve governance and implement necessary economic and fiscal reforms, which has boosted business, investor and consumer confidence, the Banking Association South Africa said, “Confidence is a fragile thing and political and social risk is always a concern in a deeply unequal society. It is the responsibility all who are part of the GNU to be considered in their remarks – and avoid brinkmanship – when, as must be expected, there are differences between parties. It is a cause for hope for the future that while there may be differences about the practicalities, many stakeholders in the economy are agreed that it is only by facilitating economic growth and effective partnerships that South Africa will be able to manage its competing priorities of reducing debt, while investing in its economic infrastructure and its people.”
Source:
- Minerals Council South Africa: “MTBS boosts infrastructure spend outlook, with mining set to benefit.”
- Banking Association South Africa: “The 2024 Medium Term Budget Policy Statement”
References:
- 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.