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Friday, November 01, 2019 / 03:00PM / United Capital Research / Header Image Credit: TimesLIVE
Recently, South Africa's Minister of Finance, Tito
Mboweni, presented the 2019 Medium Term Budget Policy Statement (MTBPS), with a
review and outlook on the country's fiscal conditions. While South Africa
continues to be a strong economic force in the African continent, the policy
statement highlighted some of the challenges that continue to undermine the
country's economic performance - high unemployment rate, Eskom debt issues and
rising debt levels.
Specifically, the MTBPS reviewed downward the
country's FY-19 economic growth, from 1.5% projected in Feb-19, to 0.5%. This
was amid the underwhelming performance recorded in Q2-19, where GDP grew
marginally by 0.9 y/y, owing to weakening global trade and electricity supply
shocks that seeped into the performance of its key sectors; Mining (-2.1%y/y)
and Manufacturing (0.5%y/y). Also, South Africa's debt level remained a key
concern, as debt to GDP ratio stood at 56.7%. What's more, is the continuous
bailout funds being plowed into the highly indebted power-giant, Eskom. With
the government set to deploy a comprehensive set of structural reforms on
Eskom's operations, including a R230bn ($15bn) intervention over the next 10
years and an unbundling into three separate entities, the MTBPS forecasts debt
to GDP to surpass 70% of GDP by 2023.
Considering the above, the key question here is,
should South Africans be worried about the country's current economic
trajectory? We believe so. However, in
view of the 2020 budget, the MTBPS identifies the need to reduce public service
wage bill, boost additional revenue and encourage private-public partnership,
with a hope to improve South Africa's economic performance.
Top African Stories
Kenya's economy to grow
at a faster pace next year -World Bank: Kenya's economy is likely to expand by
6.0% next year, rising from projected growth of 5.8% this year, due to a
favourable weather outlook, the World Bank said on Thursday. Read
more
South African Treasury:
ratings firms worried about debt, growth and wages: Ratings agencies are
concerned about South Africa's debt trajectory, economic growth and public
sector wages, the director general of National Treasury. Read
more
Nigerian supreme court
dismisses appeal against Buhari election win: Nigeria's Supreme Court on
Tuesday dismissed an appeal by the main opposition candidate to overturn the
result of February's presidential election in which Muhammadu Buhari was
returned to office. Read
more
Eskom three-way split
expected in 2022: South Africa plans a sweeping overhaul of its power sector by
breaking up loss-making state utility Eskom over the next three years and
opening the industry up to more competition, a long-awaited government paper
showed on Tuesday. Read
more
Ghana Govt inaugurates
energy sector recovery programme steering committee: Government, on Monday,
inaugurated the Energy Sector Recovery Programme Steering Committee, comprising
members across various sectors and ministries. Read
more
Rwanda pilots VW's
electric cars as eGolf model hits Kigali streets: Volkswagen is importing a
batch of electric powered Golf models into Rwanda for a local ride-hailing
service, establishing a bridgehead in the country that it hopes to expand to
other nations as it seeks to increase market share globally. Read
more
Looking Forward
Angola
Oct-19 Consumer Price Index - November 12th
Oct-19 Net Reserves - November 17th
Ghana
Oct-19 Consumer Price Index - November 13th
Sep-19 M2 Money Supply YoY - November 17th
Kenya
Sep-19 Overseas Remittances - November 15th
Nov Benchmark Interest Rate - November 25th
Senegal Oct-19 Consumer Price Index - November
15th
Morocco
Q3-19 Unemployment Rate - November 8th
Oct-19 Consumer Price Index - November 22nd
Nigeria
Oct-19 Consumer Price Index - November 14th
Q3-19 GDP Report - November 25th
South Africa
Oct-19 Gross Reserves - November 7th
Sep-19 Manufacturing Prod YoY - November 7th
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