No more SOE bailouts; Pvt sector impatient with CR; R35bn exports reviewed; Mantashe journalist bribe?

By Linda van Tilburg

  • The focus this week will be on Wednesday’s mid-term budget followed by Moody’s credit-rating review on Friday. Finance Minister Tito Mboweni will have to convince investors and Moody’s that the government has a handle on the fiscal deficit and sovereign debt levels, even as bailouts for state-owned enterprises including Eskom strain finances at a time when tax revenue is falling short of targets. Investors also expect more details on the government’s turnaround plan for Eskom. Added to the budget and Moody’s is a raft of data that will provide further clues on the outlook of the economy, starting with money supply and private credit as well as third-quarter unemployment tomorrow, producer-price inflation on Wednesday, the monthly trade balance on Thursday and manufacturing PMI and vehicles sales on Friday. It comes as Bloomberg cautions that it is time to get picky in emerging markets in the grip of political risks.
  • Opposition political parties in South Africa have urged Tito Mboweni not to give bailouts to the state-owned enterprises on Wednesday. The DA’s spokesperson on finance, Geordin Hill-Lewis said Mboweni should fix the state of the economy and to cut the public sector wage bill according to the Independent group. Hill-Lewis said the bailouts to the SOEs need to come to an end. Adding his voice to the call for an end to SOE bailouts was ACDP leader Kenneth Meshoe who said there were more pressing issues in the country including fixing infrastructure, than giving bailouts to Eskom. Dennis Bloem from Cope told the Independent that he believed that there was little the minister of finance could do to change the economic situation in the country. The issue of national debt was a serious problem. Meanwhile the DA has elected John Steenhuisen as the party’s new Parliamentary leader after the resignation of Mmusi Maimane.
  • The private sector is also becoming impatient with President Cyril Ramaphosa’s waiting game. Bloomberg reports that after 20 months of running South Africa, the waiting game is wearing thin in corporate South Africa. While there had been no shortages of policy papers, conferences and speeches outlining how to unlock economic growth, the deeply divided ruling ANC and its labour and communist allies have struggled to agree on a way forward. The Chief Executive officer of Sibanye Gold, Neal Froneman told Ramaphosa: “You have to make tough decisions. It just blows my mind that we don’t just get on and do it.” The disenchantment is evident in the financial markets with the rand down 20% against the dollar since Ramaphosa took office. SA bond yields are the highest of any country with an investment-grade credit rating.
  • R35bn in SA exports to the US are in danger of a ‘review’, which was triggered by SA’s copy right reform efforts. Business Insider reports that the US federal government announced plans for the review at the end of last week. The exports will not necessarily halt if they can no longer be sold in the US duty-free but will become less competitive compared to countries that sell the same items as members of the US Generalised system of Preferences. The review was triggered by a complaint from the US movie, music, software and book publishing companies that South Africa was not doing enough to protect intellectual property. A date for the review process has not been set.
  • The Tiso Blackstar Group said it has noted with shock the alleged admission by Mineral Resources Minister Gwede Mantashe to having paid two journalists not to publish a story about a love triangle story involving him. Tiso said the allegations were never brought to the attention of the company. The South African National Editor’s Forum said it was shocked by the allegations that Mantashe paid the journalists R70,000 to make a story about his sex life disappear. The Sunday World journalists alleged to have been paid a bribe have not been named.
  • If the week throws up a couple of curveballs to South Africa’s economy, at least hope remains in the form of the Boks who made South Africa proud by reaching the finals of the Rugby World Cup in Japan after their 19-16 win over Wales. The bookies have England as the favourite with odds of 4/7. In UK newspapers, the Boks pack is being described as brutal and that our game plan is predicated on winning collisions in both attack and defence. Coach Rassie Erasmus expects another war of attrition rather than an open game. Commenting on the English Roses confidence that they are the better team in the finals, Erasmus said they had seen in previous World Cups that teams play their finals in the semis and don’t turn up for the finals; so it could be a very good game, he said. Erasmus says they are in with a chance to win their third Rugby World Cup.