Jeffrey Schultz, Nicholas Borain, Burak Baskurt

We expect South Africa’s 2022 national budget to strike a careful balance between addressing growing social spending pressures while maintaining fiscal rectitude. 

Robust commodity-related revenue gains mean we expect the primary budget to return to balance in FY22/23, even incorporating additional social spending programmes. 

Conceivably the Treasury could cut issuance by up to 10% in Q2. However, it may wish to keep its powder dry and continue to build buffers in anticipation of additional looming, non-interest spending demands. 

With long-term debt stability still in question thanks to the glacial pace of economic reform, decisions on how to fund additional spending demands once the commodity cycle slows are likely to only come in 2023, we think. 

For now, we believe that SAGBs should continue to benefit from a Treasury that continues to stick to its consolidation playbook.