Mhlanga: SA budget needs a growth story to attract investors

Isaah Mhlanga, Chief Economist at RMB, recently shared insights on the South African budget in an interview with CNBC Africa's Fifi Peters. Mhlanga emphasized the need for South Africa to develop a compelling growth story to attract investors to the country. He discussed various aspects of the budget, highlighting both positive and concerning elements. One key issue raised was the allocation of funds saved from reducing debt service costs, which were directed towards increased spending rather than addressing underlying structural issues such as controlling spending and stimulating economic growth. Mhlanga also pointed out the budget's implications in an election year, raising questions about certain provisions that seem tailored to political considerations rather than economic prudence. Additionally, concerns were raised about the growing public sector wage bill and the lack of concrete measures to address this ongoing challenge. While some short-term positive reactions are expected due to reduced government bond issuance, the long-term sustainability of the budget remains in question. Mhlanga highlighted the importance of not only fiscal prudence but also a compelling growth narrative to entice investors and drive economic development. Structural reforms beyond the budget's scope, including improvements in logistics, energy, and infrastructure, are essential to attract foreign direct investment and foster sustainable economic growth.