A very busy week lies ahead in terms of data, starting with money supply and PSCE data tomorrow, government budget statistics on Wednesday, PPI and trade numbers on Thursday, and the Absa manufacturing PMI and Naamsa vehicle sales prints on Friday. The main event, however, will be the MTBPS on Wednesday, where Finance Minister Godongwana will deliver an update on South Africa’s fiscus to lawmakers. It is worth mentioning that the MTBPS is an interim update rather than a full-blown policy meeting. At most, the minister will use the platform to lay the groundwork for any bigger announcements in the February budget, while providing updates on National Treasury’s latest growth and fiscal forecasts. All in all, Minister Godongwana will likely tread carefully to support the narrative of fiscal consolidation in South Africa.
On that topic, it is worth noting that some of the ANC’s top brass have spoken out against the introduction of a fiscal anchor proposed by National Treasury. The head of the party’s economic transformation committee, Mmamoloko Kubayi, said on the sidelines of the ANC’s national executive committee meeting at the weekend that the party would prefer a shift to more responsible spending that does not compromise service deliver rather than placing a hard cap on rising debt. This is unfortunate since a strict fiscal rule is the only credible way for the ANC-led government to shift its fiscal trajectory onto a more sustainable path given its track record of profligacy.