I won’t belabor the point. The MTBPS left a lot to be desired. My Pre-MTBPS piece (here) indicated what the status quo is and much stays the same regarding slow growth and a debt mountain which looms large. To be a lot more pithy in my response I decided that a Word Cloud (I love these) may get right to it. This is the Word Cloud from today’s speech:
Source: Moe-Knows, Wordle
What stands out for me is that ‘Spending’ still trumps ‘Investment’ and ‘infrastructure’. The size of ‘must’ illustrates the urgency of many of the initiatives proposed especially fiscal restraint and returning to a path of debt sustainability. Let me know your thoughts on the minister’s word cloud in the comments below.
My preferred Word Cloud would look something like this:
Source: Moe-Knows, Wordle
The graphical difference illustrates the differences in where the narrative is vs. where it should go. The narrative also tends to drive where policy focus and direction are and where they are headed. Food for thought.
Some quick highlights and ‘lowlights’:
Right now, government is borrowing at a rate of R2.1 billion per day.
“Primary surpluses on the main budget by 2025/26”? As discussed in my previous piece, execution challenges mean that the market will always price in a risk premium.
“R10.5 billion is allocated to SAA to implement its business rescue plan.”
Simplistically, the R10.5bn lifeline to SAA could have bought you:
- 23 000 low cost houses at R450k per house.
- Alternately, funded the education of over half a million scholars at R20 000 for school fees.
- Or 100 000 tertiary education students at R100 000 tuition a year.
A few cents here and there and all of a sudden we are talking about REAL money!
Surely these would build more ‘capacity’ in the economy or put people on the housing and wealth creation ladder rather than the ‘strategic investment in SAA’. Where we spend the money will determine the future trajectory our economy and our youth take… something to reflect on.
These were also the charts from the National Treasury presentation which stuck out for me:
Yikes! That’s all I will say… (annotations are mine)
$USDZAR at time of writing is R16.36 after spiking to R16.50 intraday post the speech. JSE down post speech. The minutiae of daily moves mask the fact that the long-term fundamentals remain challenging. I reiterate that while global factors like generalized dollar weakness and the side show of US elections are probably in the driving seat for now, SA risks remain to the upside. For now, instead of a silver lining to this cloud, I see red ink.
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