South Africa Has Buffers to Withstand Possible Oil Price Shock From Middle East Conflict: Finance Minister
South Africa Has Buffers to Withstand Possible Oil Price Shock From Middle East Conflict: Finance Minister
The national budget presented on last Wednesday showed signs of improving fiscal stability, with the ratio of national debt to GDP stabilizing for the first time in nearly two decades and a slightly narrower deficit projected than previously forecast.
However, it did not factor in the possibility of a Middle East conflict, Enoch Godongwana said in an interview with a US media outlet.
“South Africa is a price taker,” he said, noting that rising oil prices “will have an inflationary impact for us. So the war is worrying,”
Nevertheless, the buffers built by the government should help keep its debt-consolidation plans on track despite possible turbulence on global energy markets, the minister explained.
South Africa’s National Treasury borrows about 85% of its funds in rand and the rest in foreign currencies—a ratio the minister expects to maintain.
Investors continue to hold a positive outlook for South Africa, and analysts anticipate rising global demand and prices for commodities, a trend from which the country, as a major producer, stands to benefit.
ℹ The price of Brent crude has jumped nearly 16% this week as shipping flows slowed in the Strait of Hormuz, a route through which roughly one-fifth of the world’s oil passes.
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