South Africa’s Finance Minister, Enoch Godongwana, said on Thursday that simply meeting fiscal targets will not be enough to attract investment into Africa’s largest economy, stressing that stronger economic growth is essential.
Godongwana spoke a day after presenting his annual budget, which showed that South Africa is on course to achieve a third consecutive primary budget surplus, meaning tax revenue is expected to exceed non-interest spending.
The budget also projects that the country’s debt will peak this year.
“Managing these numerical targets alone is not going to be enough in the absence of growth,” Godongwana told Reuters.
Over the past decade, South Africa’s economy has grown at an average rate of less than 1% per year. Growth improved slightly last year and is forecast to rise further to 1.6% this year.
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The country’s fiscal outlook has improved due to stronger domestic demand and high commodity prices, which have helped increase government revenue.
Godongwana said the government’s reform programme is being well received by investors and expressed optimism that this could lead to higher levels of fixed investment over time.
“I think we’re in a better space now to achieve structural reforms and macroeconomic stability, … I think all of those things will provide a pull factor for private sector investment.”
Addressing lawmakers on Wednesday, he said the government is working on introducing a legal “fiscal anchor,” which would set rules aimed at keeping public finances sustainable over the long term.
More details are expected during the mid-term budget review scheduled for October or November this year.
Godongwana, who was appointed finance minister in 2021, said on Thursday that he currently sees no reason not to complete his term, which is set to run until 2029.
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Image Credit: Reuters
