Holding the centre

At this perilous moment in our history the most realistic way to get to a disciplined and capable economy is to strengthen Ramaphosa’s hand with a convincing election win on May 8 so that he can have the necessary discussions with the ANC’S left wing

Tito Mboweni, the finance minister, has been around the shaping of ANC party economic policy for so long now it is hard to believe the national budget he presented on Wednesday was his first.

It may also be his last. I got an honourable mention in the speech he made in parliament for writing just that. Enigmatic and eccentric as ever, he has openly said that after the May 8 election he will not return to the job into which he was catapulted, out of retirement (or at least seclusion) late last year. Yet he also bristles at the suggestion that he has played a mere walkon part in the preparation of the 2019 budget.

In a way, he was the perfect person on the day. There wasn’t much he could do about the country’s finances or its sullen mood. He couldn’t cut taxes and he couldn’t do anything about growth.

But straight talking is an Mboweni speciality. I remember years ago, soon after he became governor of the Reserve Bank, he paid a visit to Zimbabwe. He came back and reported that “the wheels have come off”. It was in 2002 and the SA government, under Thabo Mbeki, was furiously trying to avoid having any opinion over what Robert Mugabe was doing to his country.

Sliding into the top Treasury job just before the medium-term budget policy statement last October, Mboweni was quick to flash clear signs of his old self. SAA, he declared, should be shut down. This as the government, under Cyril Ramaphosa, was desperately trying to save it ahead of the coming election.

The politics of the budget he presented are simple and he perfectly captured them again yesterday, to the loud applause of the main opposition party and the puzzlement of some of his own colleagues.

He announced emphatically that the state would not be taking on any of Eskom’s debt and that Eskom had got itself into debt and would have to pay its own way out. That’s about as tough a position as any I can imagine. But he wasn’t finished.

“Isn’t it about time the country asks the question,” he said. “Do we still need these [stateowned] enterprises? If we do, can we manage them better? If we don’t need them, what should we do?”

Well, quite. SA is overindebted and its stateowned enterprises (SOES) are either bankrupt or nearly bankrupt, or, like Eskom, bankrupt and, because of both its debt and the importance of its actual job, an existential threat to the country.

So a finance minister has to deal with that. The fabulously clever economics editor of this magazine, Claire Bisseker, wrote last week that in order to find the money to help Eskom, which needs it most, Mboweni could do only one of two things: negotiate a reduction in the interest rates the government pays on its debt; or raise the growth rate.

Well, raising the growth rate wasn’t possible. But cutting the length of the maturing of our bond in the markets from, say, 25 to 15 or 10 years could create significant savings in the medium term.

That is what the ratings agencies want to see — our debt falling and not rising, as we have constantly promised them it would. Well, he didn’t do that either. And nothing happened. “There is nothing new; no alternatives. This is a man who has run out of ideas. There is nothing he is offering that will take us out of this deep hole.”

Julius Malema, leader of the EFF

The yield on our benchmark R186 government bond rose to a two-month high. But that could have been much worse. And the rand weakened a bit against the US dollar. So what’s new? Mboweni has given Ramaphosa some wiggle room. A little.

Ramaphosa is hemmed in. Talk of even partial privatisation will strengthen enemies to the left of him in the ANC and he needs the unions. Even then, he can’t have the necessary discussions until he has won the election, and won it well.

Matching Jacob Zuma’s 54% in the 2016 local government elections won’t help him. He needs to get closer to, if not beyond, 60%.

At the moment pollsters are quiet. The last credible poll, from the Institute of Race Relations (IRR) still seems fairly realistic to me, though recent load-shedding blackouts may have damaged the ANC vote.

Equally, the depth of EFF leadership enrichment via the looting of VBS Mutual Bank and the true effect of Patricia de Lille’s parting with the DA are probably not completely factored in either.