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The SA Daily 14 February 2020

SONA 2020 - “fixing fundamentals”

Shireen Darmalingam

  • The rand is somewhat weaker this morning after President Ramaphosa’s State of the Nation Address (SONA) last night. It still faces significant risks in Q1:20 (Budget 2020; a likely Moody’s downgrade and resultant expulsion from WGBI). We forecast the rand at R14.60/$ by year-end.
  • The EFF disrupting the SONA last night and therefore resulting in an hour’s suspension will not sit well with sentiment. Still, President Ramaphosa said that “the SONA is about inclusive growth to build a capable state and place our economy on the path to recovery. This year, we fix the fundamentals”. He acknowledged that public finances are under severe pressure, with debt unsustainable, also noting that any economic recovery has been hamstrung by years-long power cuts. He committed to implementing measures to fundamentally change the trajectory of energy generation while Eskom works to restore operational capabilities.
  • The president also addressed already high and rising youth unemployment, noting that government will set aside 1% of the Budget for this. He also commented on the national health insurance and land expropriation issues as well as the urgent reforms required to mend South Africa.

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