Investec sees a path out of junk status by 2028 & Government's R70bn back door

SPEAKER_1 (0:01)

And now, The Money Show with Stephen Grootes on 702 Let's walk the talk.

Stephen Grootes (0:07)

The Money Show with Stephen Grootes is brought to you by Absa, making it easier to do business across Africa. Absa is an authorised financial services and registered credit provider. Ten minutes after six, good evening. Welcome to the programme. I'm Stephen Grootes. Lots to come at the start of a week. I think we're about to start a conversation as a country about debt. And one of the big sort of almost untold stories, you'll hear it on The Money Show, you'll read it in the business media, but you won't hear about it almost anywhere else, is how government, the National Treasury, has been repaying debt and been able to do that in all sorts of ways. We'll get a big conversation about that in the medium term budget policy statement on Wednesday. We'll get a sort of update on how that is going. And I know there'll be an argument from, I suppose, the left, you could call it, that would say that's an austerity budget, the money that is being paid, could be used for schools and hospitals.

I go a long way down the road with that argument, but I think I go slightly further down the road with repaying debt, because I always worry about, so okay, if you are able to put more money into health and education, and I have to say, and I hate to say this, we put so much money into health and education, and I don't know if that's suddenly, if you put more money in, if you get better outcomes, I don't know if that's the case. Maybe you do, maybe you don't.

I think is really how I would have to see it at that point, and it will be patchy, let me put it in that way.

And of course, everyone in government could do with more money. That's also true. But if you, for example, put more money into schools and increase government debt, what you're also doing to the people in those schools, if they're the ones who will have to repay the debt, our children will have to repay the debt. And I always worry about that. I really think you should not leave debt. I mean, you don't want to leave debt to your children. So, why would you do that as a country? Because you would be doing the same thing. The argument goes in lots of directions. Very keen to hear from you on it. Which way do you go? Do you repay debt? Do you improve government services? 072702-1702. And, of course, that medium-term budget policy statement on Wednesday. Talking of the medium-term budget policy statement, an interesting comment from Investec Wealth & Investment International suggesting we'll get an upgrade, should get an upgrade in the next two years. Osagyefo Mazwai, we'll speak to him in a moment, an investment strategist. Talking about government and money, a report in the Sunday Times yesterday about how money kind of funnels through government, how contracts are extended, how they are continued without any kind of oversight. Thought it important to hear the view of Khaya Sithole on that. Vijay Kumar is the CEO of Verdanta Zinc International. Big upgrade to their investment there, 10 billion rand going into their zinc mine. This is Hamsberg Face, to the big expansion in the Northern Cape. The president was there on Friday. I think that will be an important conversation. And then how ATMs are changing. They'll be white labeled. They'll remove the branding. It won't cost you more or less to go and get your cash at one ATM compared to another. All sorts of things that happen as a result of that, by the way. In some cases, it will be cheaper. In some cases, perhaps more expensive for you to draw cash. Koki Koyman is a banking analyst. I think that's going to be a really interesting conversation. You'll hear from him in a little while as well. Good to hear from you tonight. 011-883-0702-021-4460567.

Do we use any extra money to pay back debt? Do we put it to schools and hospitals? 072-702-1702. 13 minutes after 6

SPEAKER_1 (3:38)

The Money Show with Stephen Grootes, live on 92.7 and 106 FM, streaming on the Prime Media Plus app and DSTV Channel 856

Stephen Grootes (3:49)

Well, the finance minister, Inok Korenkwana, I presume, putting the finishing touches on his medium-term budget policy statement for Wednesday.

Amid that, a suggestion from Investec Asset Management that South Africa could not get a ratings upgrade in the next two years. Osagyefo Mazwai is an investment strategist at Investec Wealth & Investment International. Osagyefo, good evening and thanks for your time. One of the main reasons, I suppose, is that we've been repaying debt. How important is that in what could be an important strategic decision for us?