Read the following notes which are excerpted from a document prepared by the Minister of finance Enoch Godongwana, for a debate in parliament on the countrys 2022 Fiscal Framework and Revenue Proposals. Answer all questions. We highlighted, among others, reduced global economic growth projections owing, in part to, elevated inflation, withdrawal of the US fiscal support package and the consequences of volatility in Chinas troubled realestate sector. On the domestic outlook, we projected real economic growth of 4.8 per cent in 2021 and 2.1 per cent in 2022. We said we expect real GDP growth to moderate at 1.7 per cent in 2024. On the revenue side, we reflected on the better-than-expected revenue collection, mainly from elevated commodity prices. We indicated that although the revenue gains are expected to dissipate in the short term, some of the improved revenue collection is expected to continue over the MTEF period. Honourable Members, since then, there have been significant global developments that will have an impact on our economy notably the conflict between Russia and Ukraine. This conflict carries with it significant risks for a world economy that is yet to fully recover from the shock of the COVID-19 pandemic. 2 The longer the conflict lasts as well as the imposition of further sanctions could lead to widespread global inflation and impede global economic recovery. On the positive side, we expect that the rally in export commodity prices, stemming from supply concerns brought about by the conflict, will provide added support to the local mining sector and a possible windfall to revenue collections. However, the rising oil price, the potential weakening of the rand against the US dollar, and supply constraints around wheat pose upside risks to food and headline inflation. Yesterday, StatsSA released GDP numbers for the fourth quarter of 2021 our economy grew by 1.2 percent, after shrinking by 1.7 percent in the third quarter of 2021. This is 0.2 percent lower than the Treasury estimations. Overall, South Africas economy grew by 4.9 percent last year, compared to the Covid-19-driven contraction of 6.4 percent in 2020. This represents a slightly better growth than estimated by National Treasury. There were improvements in a number of sectors namely: agriculture, manufacturing, services and transport. Of concern are declines in mining production, construction, electricity, PBA4802 OCTOBER/NOVEMBER 2022 PORTFOLIO EXAMINATION 7 | P a g e government and financial services. Madam Speaker, we must act with speed to accelerate the pace of inclusive economic growth and job creation. This must shape all our macro and micro economic policies and interventions. It is only through sustained economic growth that South Africa will be able to significantly reduce unemployment, poverty and inequality. As outlined in the Economic Reconstruction and Recovery Plan, and emphasized in the State of the Nation Address as well as the Budget Speech, we must act urgently to deepen social compacting and broaden consensus around what needs to be done to pull our economy out of its poor state. In this regard, work has begun to finalize a series of social compacts with various social partners. Efforts to grow our economy will not only depend on macro-economic interventions. We must continue with our reform agenda in energy, telecommunications, rail, ports water and sanitation, as well as in boosting tourism and attracting rare skills into our economy. We are encouraged that the spectrum auction began yesterday, and will be complete by the end of this month. This will support lowering the cost of data; improving broadband coverage including in rural areas; increasing broadband speeds; and the rollout of 5G. Equally, we also need to get the basics right. This entails reducing regulatory constraints, providing effective services, as well as coordinating and sequencing economic interventions. Our cities and provinces have an important role to play in creating an enabling environment for investment. 3 In the City of Tshwane, for example, we are at risk of losing a potential multi-billion-rand investment by Ford in an electric vehicle plant. Ford has already invested R16 billion in the Tshwane Automotive Special Economic Zone where it is producing its Ford Ranger model. This is the largest foreign direct investment project our country has seen in recent times and has already created around 8,000 jobs. Ford intended to invest further in bringing its electric vehicle production to South Africa. This, however, has been put at risk because the City of Tshwane has been unable and perhaps unwilling to secure the electricity the new plant needs. The Tshwane example reminds us that a deficit of political will at the municipal level makes it massively harder than it should be to create conditions for job-rich growth. Madam Speaker, as part of addressing the public sector wage bill, a Public Sector Labour Summit is scheduled to take place at the end of this month. The Summit is an important opportunity for all stakeholders to engage honestly and transparently and chart a path towards more sustainable public service and PBA4802 OCTOBER/NOVEMBER 2022 PORTFOLIO EXAMINATION 8 | P a g e remuneration guidelines. Much has been made of $750 million loan that we took from the World Bank. Let me repeat what we said before. The World Bank loan has no conditionalities attached. It does not in any way threaten the sovereignty of our country. We considered all forms of concessional and non-concessional funding necessary to address the shortfall between our revenue and our expenditure. We then chose an affordable option available to us.Question 1 1. The minister of finance highlighted some risks to the countrys inflation, including the possibility of a weakening Rand. In the long term, is a stronger or weaker rand beneficial for South Africa? When answering this question, please take into consideration both endogenous and exogenous factors at play. You must also motivate why either of the two is more beneficial. [40 MarkQuestion 2 2. There are some economies on the continent which have done better than others. In Zambia, the Kwacha has been the worlds best-performing currency against the dollar for much of the year and the country has been able to bring inflation under control. On the other hand, whilst South Africas economy has seen some positives, there are a number of challenges which have constrained growth. The minister of Finance in the excerpt above outlined the need for reforms in different sectors of the economy, including telecommunications and the energy sector. Considering this, how will South Africas small, medium, and micro enterprises take advantage of the Africa Continental Free trade Area Agreement given some of the challenges mentioned by the minister, particularly around energy constraints? In PBA4802 OCTOBER/NOVEMBER 2022 PORTFOLIO EXAMINATION 9 | P a g e answering this question, you must use global business concepts, in the context of the cross-border trade.