Finance Minister Enoch Godongwana is under pressure to prioritize policies that will grow and stimulate the economy and foreign direct investments when he tables the 2022 national budget on Wednesday, following a bullish state of the nation address by President Cyril Ramaphosa last week.
Godongwana, who has been in the job for six months, is expected to table a pro-growth and debt stabilisation blueprint for the country.
FNB chief economist Mamello Matikinca-Ngwenya said the budget came when the severe real-time impact of the pandemic on economic activity had largely diminished, but poverty and unemployment had deepened. “Overall, while the government confronts genuine material trade-offs, we expect the budget to demonstrate a continued commitment to the current fiscal consolidation path while emphasising (and highlighting) progress on growth-enhancing reforms and related infrastructure plans,” she said.
Godongwana’s maiden budget speech will come a week after the International Monetary Fund warned that the country faced lacklustre growth in the medium term.
“The economic recovery is deemed fragile, as it was accompanied by worsening unemployment (34.9%), weak bank lending to the private sector, and anaemic private investment. “Despite the growth rebound, poverty and inequality did not show signs of improvement,” the Washington-based lender said.
Citadel’s chief economist, Maarten Ackerman, said he expected the minister would focus on investments and business-friendly policies that will enable economic growth.
“One can’t really fault Ramaphosa’s economic policies but what we need to see now is proper implementation to kickstart economic growth of at least 3%. It all boils down to fixing economic growth,” he said.
South Africa’s economic growth has been stagnating for more than a decade while registering greater population growth and an all-time high unemployment rate.
At its monetary policy committee meeting last month, the South African Reserve Bank, said it expected the economy to grow by 1.7% this year, with growth forecasts of 1.8% for 2023 and 2% for 2024.
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