In a bid to reignite economic growth and offset the blows dealt by a downturn in diamond demand, South Africa’s neighbour country has unveiled ambitious plans to bolster infrastructure development. The Finance Minister, Peggy Serame, outlined the nation’s path to recovery in a budget speech delivered on Monday.
With diamonds historically serving as a financial backbone, last year’s decline in demand had significant repercussions, with the gems contributing to 30% of revenue and a substantial 70% of foreign exchange earnings.
Serame projected a measured recovery, indicating a growth rate of 3.2% for 2023, slightly lower than previous estimates. However, optimism loomed as forecasts painted a brighter picture, with growth expected to surge to 4.2% in the current year and a promising 5.4% by 2025, buoyed by global economic resurgence.
Addressing fiscal concerns, Serame disclosed that the budget deficit for the 2024/25 fiscal year was estimated at 8.69 billion pula, marking a notable increase from the current year’s projection of 7.13 billion pula deficit.
Key to the recovery strategy is a substantial increase in infrastructure spending, with Serame emphasizing a targeted approach to bridge existing gaps in crucial sectors such as water, transport, and energy. Overall, investment in infrastructure is slated to surge by over 33% in the upcoming fiscal year.
Innovative financing mechanisms are also on the agenda, with the government exploring avenues to mobilize additional resources. Serame revealed plans to issue instruments such as inflation-linked bonds and green bonds to harness sustainable funding streams for development projects.
The announcement underscores a concerted effort to chart a course towards economic resilience, leveraging strategic investments and financial instruments to navigate through challenges and capitalize on emerging opportunities. As the region braces for a post-pandemic era, the commitment to infrastructure development stands as a cornerstone for sustainable growth and prosperity.
