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Negative to Stable outlook? Does it matter?

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  The Relevance of the Negative to Stable outlook. 14 April 2022.  By: Abongile Vika “Main contributor to the stable outlook is the improvement  in South Africa’s fiscal position which led to  a higher likelihood of debt stabilization.”  One of the two most crucial areas for the government has been to improve our fiscal position through debt stabilization and to accelerate economic growth. The one that we can see some level of progress in is debt stabilization. However, this should not be seen as a big win as the economy is still faced with very large risks. Addressing the structural constraints in SA’s economy to accelerate economic growth will take more time than we would hope but this does not mean we should not point to some small positive signs that we might be moving in the right direction even though in reality this will not make much of a difference in the day-to-day lives of South Africans.   Before Covid and During Covid: We were in a low growth/h...
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Budget 2022 Analysis: Are Fiscal Consolidation & Accelerated Economic Recovery, Mutually Exclusive???

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  One of the biggest headaches for the finance minister has been our fiscal position and debt management. The problem is not so much that we are getting more debt but rather how we spend that debt has been the main problem. Since 2008, we have been increasing our debt to GDP ratio, however the unemployment rate has been on the rise (the graphs below highlight this) and economic growth has stagnated. Suggesting that we were not investing our money in places to create jobs or drive growth. This leaves us in a situation where we are not generating enough revenue to pay off the debt that we are accumulating. The revenue could have come from increased tax revenue form both the corporate income tax rate and the individual income tax as there would be more workers. As the minister stated in the speech this meant that our Debt-servicing costs were very high. Currently we were paying R330 BN annually on debt service costs which are higher than the budget for police, health and basic educat...
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SONA22_ A Brief Analysis

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  On Thursday evening I sat glued to the television listening to President Cyril Ramaphosa’s 5 th State of the Nation Address (SONA) from the Cape Town City Hall. I was watching as a student of Econometrics, and hereunder will provide a brief analysis of what I believe to be the most crucial elements of SONA 2022 with regards to the economy. Firstly, allow me to give very brief definitions of a few terms that are relevant for my short analysis:   ·          COORDINATION FAILURE is defined as a situation whereby, the inability of agents to coordinate their behavior leads to an equilibrium that is worse off than another possible equilibrium (Todaro, 2015, p165). ·          A COMPLEMENTARITY is an action taken by an agent which increases the incentives for other agents to take similar actions (Todaro, 2015, p166). ·          A BIG PUSH is a concerted ...
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