5 important things happening in South Africa today

·28 Jul 2023

Here’s what is happening in and affecting South Africa today:

Debt crisis ahead: Research by the Wits Public Economy Project (PEP) forecasts that South Africa’s public debt will rise towards 80% by 2025 due to an increase in money spent on wages, grants and revising existing debt. This implies larger spending cuts and/or higher taxes, which will further deteriorate economic growth and service delivery. [Business Day]

Eskom’s unbundling delay: Eskom has failed to convince the National Energy Regulator of South Africa (Nersa) to expedite the process of granting the National Transmission Company of South Africa a licence to operate. This means the utility will likely miss its deadline to have a transmission company operating by December, ultimately delaying a competitive energy generation sector in the country. [Mail & Guardian]

Treasury prepares for worst-case scenario: Finance Minister Enoch Godongwana has said the National Treasury is considering the potential loss of benefits and the risk of secondary sanctions if South Africa is ousted from the AGOA trade agreement as a result of its ties with Russia. Godongwana added that this type of consideration will take some time, but expected stresses include higher inflation rates, borrowing costs, and bond yields – all of which weaken the fiscal position considerably. [News24]

Eskom’s diesel issue: Eskom has already burnt through R12.4 billion on diesel to run its emergency generation fleet in just under the first four months into the current financial year ending 1 March 2024. It took eight months for Eskom to spend R12-billion on diesel last year, meaning the utility is on track to run out of funds for its OCGTs – which could result in record stages of load shedding towards the end of the year. Eskom’s diesel budget for the year is R27.9 billion. [Daily Maverick]

Markets: The rand made strong gains on Thursday, bolstered by bets that the US Federal Reserve has reached the end of its interest rate hikes. “We’ve likely arrived at peak rates in the US,” said Nolan Wapenaar, co-chief investment officer at South African asset manager Anchor Capital. On Friday (28 July), the rand was trading at R17.85/$, R19.58/€, and R22.82/£. Brent crude is trading at $83.75 a barrel. [MoneyWeb]

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