Major Announcements in Second State of the Nation Address
State of the Nation Address
Delivering his second State of the Nation Address in Parliament on
Thursday evening, President Cyril Ramaphosa made some major announcements,
among others that the nation-wide elections will be held on 8 May 2019.
Delivering his second State of the Nation Address in Parliament on Thursday evening, President Cyril Ramaphosa made some major announcements, among others that the nation-wide elections will be held on 8 May 2019. What follows is a brief summary of the key economical points the president touched on in his speech:
- One of the most far-reaching announcements is the splitting up of debt-laden Eskom into three separate entities – generation, transmission and distribution – in an effort to isolate costs and give each entity appropriate responsibility. Eskom has a debt burden of R420bn. Should the power utility default on its debt, this would have implications for the country’s sovereign credit rating, as government will have to step in to bail it out.
- State-owned enterprises (SOEs) will not be privatised and no assets of the state will be disposed of that are strategic to the development of the economy and the country’s people. However, government will consider selling certain state assets and bringing in strategic equity partners for others. Over the past year, new boards had been appointed at Eskom, Denel, Transnet, Safcol, Prasa and SA Express.
- South Africa will again host an Investment Conference in 2019 in an attempt to attract foreign direct investment into the economy.
- Government welcomed Total SA’s new “world-class” oil and gas province off the coast of South Africa following a significant gas-condensate discovery while drilling in deep-sea waters. The French oil giant has been prospecting some 180 kilometres off the coast of Mossel Bay in the Outeniqua Basin. The new oil and gas region have estimated volumes of 1 billion barrels.
- Government is addressing concerns around policy uncertainty and inconsistency.
On the international front, the European Commission cut its forecasts for euro zone economic growth this year. The Commission said euro zone growth will slow to 1.3% this year from 1.9% in 2018, before rebounding in 2020 to 1.6%.
US President Donald Trump said he will not meet Chinese President Xi Jinping before a 1 March deadline to avert higher US tariffs on Chinese goods, intensifying fears the two will not strike a deal before the end of a 90-day truce.
Returning to the domestic front, Finance Minister Tito Mboweni will be facing a juggling act with modest economic growth forecasts and rising debt in his upcoming maiden Budget in Parliament on 20 February at 14:00.
SECURITAS – Wealth Management
buy something that you’d be perfectly happy to hold if the market shut down for