The State of the Nation Address (Sona) by President Jacob Zuma on February 11 is actually more important than the budget to be delivered by Finance Minister Pravin Gordhan two weeks later, according to emerging markets economist Peter Attard Montalto of Nomura.
"After the political shock of three finance ministers in two weeks, opening Pandora's box in December, a key question has arisen as to the political power of the new (old) Finance Minister Pravin Gordhan," said Montalto on Wednesday.
"We will watch closely - as will ratings agencies - to see the broader scope of policies on issues affecting growth and the investment environment."
Apart from possible protests and disruptions from opposition parties, Montalto expects a broadly left-leaning Sona speech in terms of policy specifics outside of what it calls "National Treasury areas".
He also expects a concerted and conservative segment on fiscal consolidation, possible hints at tax increases, parastatal management and investments.
"We expect no major surprise policies or any major growth-boosting policies to reassure rating agencies - despite rhetoric about doing everything to secure the rating," said Montalto.
"Markets still don't fully grasp that rating agencies (and especially S&P) look set to downgrade South Africa in the medium run to sub-investment grade. This is not because of the budget per se, but because of the lack of growth prospects and an investment-friendly environment, which in turn throws up medium-run budget risks."
He pointed out that for this reason Nomura has always said that it is not fiscal policy that will be to blame for the sovereign reaching junk status, but the government and the rest of policy - especially microeconomic policy.
Montalto believes Gordhan is having considerable influence on parastatals and issues like modalities of funding for education, but not on core issues like labour market reforms or being able to prevent a high level national minimum wage.
"Put simply, we don't believe he is having a great effect on growth-boosting policy areas and the political scope of National Treasury actions remains narrow," said Montalto.
"We see cognitive dissonance because we see the Sona saying government is doing everything to boost growth and avoid entering sub-investment grade, but at the same time talking about accelerated land reform, minimum wage and more direct government involvement in the economy.