The continued deterioration in South Africa’s budget position in recent months leaves Finance Minister Enoch Godongwana facing an uphill challenge to reassure investors at November’s Medium Term Budget Policy Statement. The focus seems to be turning to a fiscal rule. But even if that materialises, we think that government will struggle to tighten policy enough to place the public finances on a more sustainable footing. Ultimately, officials are likely to be forced down the route of financial repression policies.
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