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Post-Budget Sell-Side Views

SOUTH AFRICA
  • Barclays note that the partial financing of the 2024 budget by drawing from gold and foreign exchange reserves should help reduce funding needs and support the bond market in the short term, but point to longer-term external sector constraints.
  • Similarly, Investec say the fiscal forecasts for the main budget revenues and expenditures for F23/24 were largely consistent with the projections set out in the MTBPS, but note that there is a risk associated with the forecast due to the assumption that there will be a significant reduction in spending in the first quarter of 2024. They add that although the GDP growth rate is forecasted to improve to 1.3% in 2024 from an estimated 0.6% in 2023, this level of growth remains insufficient as more robust economic expansion is necessary to stimulate private sector fixed investment and employment.
  • Goldman Sachs view the projected debt projections as credible given the administration’s track record on spending restraint under the leadership of the current (and former) finance minister.
  • JP Morgan think the budget was ‘as good as it gets’ for local bonds, with front-loaded GFECRA funding presented with a prudent implementation framework. They have marginally improved their budget deficit projections – to 4.9% in FY24/25 (from -5.1%) and 4.8% in FY25/26 (from -5.1%).
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