South Africa’s fiscal targets run the risk of not being met again
SOUTH Africa’s fiscal targets, which are to be outlined in the national Budget next week, run the risk of not being met again unless issues of ethical leadership, corruption and skills development are addressed, Christopher Palm, the chief risk adviser of the Institute of Risk Management South Africa’s (Irmsa) said.
The risks, identified in the Irmsa annual risk report launched yesterday, were addressed in varying degrees in the State of the Nation Address (Sona) on Thursday, Palm said yesterday.
Most issues that were addressed in the Sona were also among the risks identified in the Irmsa report, such as education, health and unemployment.
“This report is a blueprint for action,” he said.
Key risks identified in the Irmsa report were: Sparseness of unified ethical and visionary leadership, private and public governance failures, failure to root out corruption, changes in legislation, ill-conceived National Health Insurance policies, land reform risks and failure to develop and retain talent.
Other risks were extreme weather, climate change, insufficient energy, disruptive technologies, cyber attacks and data fraud, and the failure and delay of economic reform initiatives.
Solutions for each of the risks were identified in the report. “We took an integrated look at what is required to build a risk and resilient country within the context of the three possible Irmsa scenarios,” said Palm.
Regarding the local economy, the favourable scenario sees an economy on its way to 5 percent growth, business confidence increases, fast rising foreign investment and South Africa becoming Africa’s leading economy again.
In the Fake It Till We Make it… Or Not? scenario, the economy, after years of low growth, stagnates, then goes into recession, The state continues to pursue “reckless out of date socialist and market-unfriendly policies that lead to ratings downgrades and major capital flight, while inflation, government debt, and interest rates soar”.
On climate change, in the two worse scenarios, South Africans will either be too caught up in political and social squabbles to undertake serious climate change initiatives.
The report – which involved polling 585 risk experts and decision-makers across industries in the public and private sectors – evaluated key current developments and included forward-looking views and scenarios.