Key points
- There have been some positive signs concerning the economy since the establishment of the GNU. The upcoming MTBPS will need to speak to these positive developments and build on the recent improvement in business and consumer confidence. It can do so by articulating how current policy will help foster economic dynamism while still keeping government expenditure in check.
- The MTBPS holds great significance for the ZAR because it is an update on the progress made. The evolution of the virtuous cycle depends on it. If investors feel confident that the GNU has matters in hand and is progressing towards stabilising the fiscus, the risk of trading SA assets will decline. A lower risk profile would help attract foreign capital, which would underpin the performance of the ZAR.
BASELINE VIEW:
The October MTBPS has market-moving potential, not just in the immediate aftermath of its release, but could help set expectations ahead of February’s budget next year. Any signs that the authorities are making progress in improving the country’s fiscal sustainability would go a long way to enticing foreign capital to SA shores that would go a long way to supporting the ZAR. A positive MTBPS would boost the ZAR’s appreciation potential into 2025
Read more