Finance Minister Enoch Godongwana shifting gears

South Africa has strengthened fiscal discipline and now must lift economic growth, Finance Minister Enoch Godongwana said.

“We’re still struggling with growth,” he said in an interview in Cape Town on Thursday, a day after delivering a well-received medium-term budget that unveiled new fiscal rules and showed debt declining.

While debt and budget metrics improved, the Treasury downgraded its growth forecast to 1.2% this year from a previous estimate of 1.6% due to pressures from the war in Iran.

The economy is expected to gradually pick up steam and reach 2% growth in 2029. This is still below the level needed to make a meaningful dent in grinding poverty and an unemployment rate of more than 30%.

Godongwana said that beyond getting public finances back on track, the government must translate fiscal gains into better social outcomes.

The country’s economy has suffered years of feeble growth and ballooning deficits under the scandal-marred rule of former President Jacob Zuma.

Godongwana’s mid-term budget highlighted efforts to accelerate infrastructure investment, with capital spending set to become the fastest-growing component of the budget over the next three years to help grow the economy.

“If we’ve achieved fiscal sustainability, the second set of issues is going to be saying, ‘How do we measure performance?’ before we can set a goal,” Godongwana said. “We’ve got to measure performance, particularly on the social economy.”