By Raymond Parsons
As prior to the 2024 elections the Sona would, as expected, inevitably be largely a party-political statement and as well as also take stock of the government’s achievements over the decades, there were, nonetheless, highly familiar features of the comprehensive Address that require critical assessment as to whether certain outcomes have actually been realised.
There is clearly still much ‘unfinished business’ on the national agenda, including a more coherent overall economic plan for much higher job-rich inclusive growth.
The Sona acknowledged the importance of expediting solutions, in collaboration with the business sector and civil society, to overcome the serious on-going obstacles that continue to weaken the country’s economic performance. In particular, the partnership with business in resolving the wide-ranging problems of energy, logistics as well as crime and corruption, must remain of the highest priority.
A large part of the economic resilience South Africa has nevertheless exhibited so far clearly owes a great deal to the positive engagement and commitment of the private sector in expediting public delivery.
Beyond the broad expectations of the Sona, nonetheless, remains the tough financial realities and difficulties in the Budget on February 21. Fiscal space has now shrunk markedly.
A strong combination of weak growth, rising debt and excessive spending have posed serious risks to the fiscal outlook. Given the unresolved fiscal vulnerabilities apparent in the medium-term Budget in November 2023 the bar will be set high for the main Budget later this month.
The 2024/25 Budget needs to embody tangible outcomes that build credibility against a background in which fiscal targets have consistently been missed. South Africa is already at the outer limits of what it can reasonably do to curtail its debt burden and stabilise its public finances.
This is where the big challenge now lies in the aftermath of the Sona and for South Africa’s future risk premium.
NWU Business School economist Professor Raymond Parsons