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Parliament’s Budget has said the National Treasury is mistaking the government’s budget surplus and a recently improved risk premium for economic resilience.

Parliament’s economists have been critiquing the Medium-Term Budget Policy Statement delivered by Finance Minister Enoch Godongwana last week before a joint meeting of finance committees on Tuesday.

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Parliament said the country’s low economic growth and high unemployment do not support the government’s claims of fiscal resilience when compared to other developing countries.

In its analysis of South Africa’s risk profile, Parliament’s Budget Office (PBO) said country comparative data from the International Monetary Fund indicates that South Africa is performing poorly and will continue to do so for the next two years.

The PBO’s deputy director Seeraj Mohamed said the artificial intelligence boom in developed countries, which has led to the selling-off of government bonds and the subsequent search for investments in emerging markets, cannot be viewed as a positive indicator of the government’s finances.

He said when compared to countries such as India, Brazil and Mexico, South Africa continues to be an outlier when unemployment is taken into account.

“What South Africa is arguing is that resilience is basically related to this sentiment temporarily turning against the developed countries. We clearly don’t have the resilience that we are talking about or thinking about, and we really need to rethink how we measure resilience and economic performance,” said Mohamed.

Parliament’s economists are also critical of the narrative that the Treasury’s commitment to fiscal consolidation will increase business sentiment and lead to increasing investment and economic growth.

Instead, they say the restriction on expenditure has contributed to large cumulative backlogs in infrastructure development and socio-economic improvement.

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