In evaluating the good and the bad in this year's medium-term budget, Jean-Pierre Geldenhuys comes to the conclusion that this budget offers hope for many South Africans. Here's why
Furthermore, high investment will also help achieve a high rate of economic growth: low and volatile public and private investment help explain South Africa’s low average economic growth from 2009 onwards.
But crucial details, such as the exact amount of Eskom’s debt that government will take on and the implications that this will have for government’s finances, were deferred to next year’s budget. Furthermore, public sector unions and government have still not reached an agreement about public sector pay increases: government is offering a 3% increase, while unions are demanding increases of between 6% and 10%.
And, as Philippe Burger, Franz Siebrits and Estian Calitz have shown, the South African government is more likely to cut capital and infrastructure spending than current spending when faced with difficult decisions about the prioritisation of spending, which will adversely affect the growth prospects of the economy. Central bank policy rates will probably increase further in the coming months, both here and abroad, as they try to combat persistently high inflation.
This implies that the Reserve Bank is now pursuing an even lower inflation target, given that it started aiming for the midpoint of the target range from about 2016.To date, government has been relatively silent on this issue, despite evidence from several economic studies that low inflation rates only contribute marginally to economic growth in high-income countries, let alone middle-income countries such as South Africa.
While central banks are increasing their policy rates to combat inflation, debt service costs may increase sharply, which may lead to fiscal dominance, which has been referred to by Luchelle Soobyah and Nicola Viegi in a recent Reserve Bank Working Paper. This grant’s expiration date has been extended three times since its introduction in 2020, and there is no sunset clause for it.
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
JEAN PIERRE VERSTER: The new stock market generalsIf the generals are the last to get shot, as they say in the market, be deeply cautious when it comes to the share price performance of some US big guns, writes JP_Verster.
Read more »
JEAN PIERRE VERSTER: The new stock market generalsIf the generals are the last to get shot, as they say in the market, be deeply cautious when it comes to the share price performance of some US big guns, writes JP_Verster.
Read more »
South Africa: 19 Bodies Found at Krugersdorp Mine - South African News Briefs - November 3, 2022
Read more »
South Africa: South African businesses are taking longer to pay off their debtsBusiness debt conditions have declined in the second quarter of this year, with this downward trajectory likely to continue in the coming quarters, according to new insight from Experian South Africa.
Read more »
South Africa: Public Servants Given Go-Ahead to Strike - South African News Briefs - November 4, 2022
Read more »