A Fiscal Turnaround: Godongwana Points to Debt Stabilization and Grey-List Exit as Key Wins

Finance Minister Enoch Godongwana has pointed to two significant achievements as evidence that South Africa’s fiscal ship is being steadied: the country is on track to stabilize its public debt and has successfully exited the Financial Action Task Force (FATF) grey list.

In his Medium-Term Budget Policy Statement (MTBPS), the minister highlighted these milestones as foundational successes that are already beginning to pay dividends for the economy.

Delivering on Key Promises

“Two years ago, we committed to stabilising public debt in the current year and then begin to reduce it. Despite a challenging environment… we are on track to achieve this goal,” Godongwana stated.

Perhaps the most notable achievement was the speed of the country’s removal from the international watchdog’s grey list. “We have delivered on this commitment in just two and a half years,” the minister said, crediting a collaborative effort across government and the private sector.

This exit is more than just a diplomatic win; it has tangible economic benefits. “Exiting the grey list enhances South Africa’s attractiveness to investors and makes it easier to do business with us,” Godongwana explained.

The Tangible Benefits: Lower Costs and Growing Confidence

This renewed credibility is already translating into financial gains. The government’s progress has lowered the risk premium on South African bonds, which has directly led to reduced debt-service costs. In fact, debt service costs for the current year are projected to be R4.8 billion lower than what was budgeted in February.

Furthermore, foreign investor appetite is returning. Foreign participation in domestic bond auctions has grown from 24.8% in April to 26.8% in September, a sign of improving international confidence in South Africa’s fiscal management.

The Road Ahead

Despite these positive steps, Godongwana struck a note of caution, warning of an uncertain global economic outlook and the potential for volatility in financial markets.

The focus, he indicated, must now shift decisively towards leveraging this improved fiscal foundation to achieve what matters most: growing the economy at a faster rate to create jobs and improve the lives of all South Africans. The building blocks of stability are in place; the next test is building prosperity upon them.

{Source: IOL}

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