South Africa changing gears

South Africa’s finance minister will prioritize investment in infrastructure when he delivers a budget update next month, the first to be tabled under the nation’s new coalition government, according to the head of the National Treasury.

The establishment of the business-friendly 10-party administration in June has fueled a rally in the rand, which, coupled with more favourable international conditions, has eased some pressure on the fiscus, Treasury Director-General Duncan Pieterse told a conference organized by media outlet News24 in Johannesburg on Friday.

“You have a much stronger currency, which obviously feeds back into lower imported inflation; you’ve got an interest-rate cycle that seems to be turning, and all of those things are positive for the fiscal framework,” he said.

“We also have to start directing our effort and our resources into the areas that are going to get the economy to grow, and that’s infrastructure, and that’s going to be a big focus of the medium-term budget policy statement.”

Finance Minister Enoch Godongwana is due to table the revised budget plan on October 30. 

While South Africa is benefitting from a favorable investment climate, it still needs to implement reforms to maintain the momentum, according to Pieterse. 

“What you really want is to leverage that positive sentiment and have that translate into situations where consumers are confident to spend, and businesses are confident to invest, and that comes down to the policy environment,” he said.