If the “right messages” emerged from the upcoming Medium-Term Budget Policy Statement (MTBPS), South Africa could avoid another ratings downgrade, Business Unity South Africa (Busa) said on Monday.
The MTBPS, which was expected to be released on Wednesday, should move to ease fears on another international credit-rating downgrade of South Africa, which would have negative consequences for bond yields and the currency and, consequently, the economy.
The Budget should also reassure stakeholders on the consolidation of the fiscal debt and outline government’s borrowing requirements.
“This year's MTBPS comes at a critical time when there is general agreement that South Africa's economic performance is well below potential, and business and investor confidence are weak,” the organisation said.
The Budget also needed to deliver a fairly precise short-term economic outlook and analyse the extent to which fiscal policy and other decisions would be aligned with the National Development Plan (NDP).
Busa reiterated its belief that the implementation of the NDP was critical to accelerating economic growth and viewed the forthcoming MTBPS as another significant opportunity for government to reaffirm its commitment to the plan.
However, the fiscal implications of the NDP should be clarified and a clear, irreversible commitment to the proper implementation of the NDP was vital, the organisation stressed.
“Although implementing the NDP will inevitably take time, both the MTBPS and the main budget remain authoritative annual milestones of what progress is being made to achieve positive outcomes, as well as of how they will be financed.
“The NDP remains an essential roadmap for the structural reforms that will facilitate stronger and inclusive private sector-led growth, in which fiscal policy plays an important role.”