For Creamer Media in Johannesburg, I’m Halima Frost.

Making headlines: Godongwana outlines plans for shifting spending focus towards infrastructure; Eskom’s borrowing costs fall as investors warm to turnaround; And, Senegal president and ruling party clash over leadership post

Godongwana outlines plans for shifting spending focus towards infrastructure

Finance Minister Enoch Godongwana has outlined several initiatives being undertaken to finally begin shifting the composition of government spending from consumption to capital investment, including plans for a R15-billion infrastructure bond in the coming months.

Such a shift has been signalled for several years, but the Medium-Term Budget Policy Statement reaffirms that capital payments will be the fastest-growing area of spending over the coming three years, with plans also advancing to accelerate private sector participation in the financing and delivery of infrastructure.

Godongwana said in his address to Parliament that government is shifting the composition of spending from consumption to investment.

Capital payments are the fastest growing expenditure item at 7.5% over the medium-term, he explained.

Gross fixed-capital formation has been in decline as a share of GDP since the 2008 global financial crisis, and currently stands at about 14%, which is below pre-Covid levels and less than half of the 30% targeted by the National Development Plan 2030.

The National Treasury is preparing a minimum R15-billion infrastructure bond issuance for Budget Facility for Infrastructure special window projects, having recently reconfigured the BFI to accommodate four yearly bid windows instead of one.

Eskom’s borrowing costs fall as investors warm to turnaround

A measure of Eskom’s credit risk has narrowed to the lowest in a year as investors deepen bets that South Africa’s State-owned power utility has turned a corner after years of crisis.

The extra yield investors demand to own Eskom’s 2033 rand bonds rather than South African government debt has compressed to about 88 basis points from a high of 155 in May. The gap has averaged 115 basis points over the past five years as the utility grappled with a debt burden and mismanagement that moved Goldman Sachs to describe it as the single biggest threat to South Africa’s economy.

The bond rally follows steady progress on Eskom’s restructuring plan, supported by the government’s R254-billion debt-relief package announced in 2023. The utility has cut its total debt to R372-billion by March, from 412-billion rand a year earlier, and aims to lower that figure to R300-billion within two years, when it plans to return to debt capital markets.

Eskom has largely stabilised South Africa’s electricity grid after years of record blackouts caused by breakdowns at coal-fired power plants that weighed on its revenue and crimped economic growth. In September, it reported its first full-year profit in eight years.

And, Senegal president and ruling party clash over leadership post

Senegal's president and the political party he belongs to have issued conflicting statements over the leadership of the ruling coalition, a clear sign of dissension among top leaders amid drawn-out talks with the International Monetary Fund.

The West African country is trying to negotiate a new lending programme after the IMF froze a $1.8-billion financial support package last year. That decision was taken after the government disclosed hidden debts that are now estimated at more than $11-billion, which it blames on the previous government.

President Bassirou Diomaye Faye and Prime Minister Ousmane Sonko hail from the same political party and have dismissed long-swirling rumours of a power struggle between them.

The charismatic Sonko, popular among Senegalese youth, chose the little-known Faye as his replacement to run for president when Sonko was barred from contesting in 2024.

Faye then appointed Sonko as prime minister.

Any suggestion of discord raises the possibility of further delays in negotiations with the IMF.

That’s a roundup of news making headlines today

Don’t forget to follow us on the X platform, at the handle @PolityZA