Cape Town – South Africa's Finance Minister Enoch Godongwana stressed the need for higher economic growth, saying on Thursday that meeting fiscal targets alone is insufficient to attract investment to Africa's largest economy. Godongwana was speaking a day after his annual budget showed the country's economy was on track for its third consecutive primary budget surplus, with tax revenues exceeding non-interest spending, and debt was projected to peak this year.
“Managing these numerical targets alone will not be enough in the absence of development,” Godongwana told Reuters.
South Africa's economic growth has averaged less than 1% over the past decade, but it increased slightly last year and is expected to rise to 1.6% this year.
The fiscal picture also looks better with improving domestic demand and stronger commodity prices, which have helped boost government revenues.
Godongwana said the government's reform agenda was being well received by investors and hoped this would translate into higher levels of fixed investment over time.
“I think we are now in a better position to achieve structural reforms and macroeconomic stability, … I think all these things will provide an attraction factor for private sector investment.”
He told MPs on Wednesday that the government is working on a legal “fiscal anchor”, a set of rules to ensure that public finances are sustainable over the long term.
He is expected to give more details in the mid-term budget review to be held in October or November this year.
Godongwana, who was appointed finance minister in 2021, said on Thursday there was currently no reason for him not to finish his term, which is due to run until 2029.