GRIM TALE OF SUCCESSIVE BUDGETS
Comparison with the speech of 2018 paints a frightening picture of the ANC’s failure
When Malusi Gigaba stood before parliament as finance minister on February 21 2018 to deliver the budget speech, he said: “We have the opportunity to achieve faster and more inclusive growth, to create jobs for our people and a better life for all South Africans.”
He gave a list of positives to help achieve this “better life”: a favourable global economic outlook, improved prices for our exports, a stronger rand, a favourable inflation outlook, business-government partnerships to prevent further ratings downgrades, plus improving business and consumer confidence.
However, to exploit these opportunities, Gigaba said, we must emulate late Tanzanian leader Julius Nyerere and “run while others walk”.
The environment around this week’s national budget, the last of this administration, illustrates clearly how we failed to “run while others walk”. Indeed, for six years we have strolled along like young lovers with time on their hands, while our emerging-market peers strained their muscles to forge ahead. We failed at every turn to exploit the opportunities and fulfil our promise.
That tells you nothing new, except to raise the frightening question: if the Ramaphosa administration has failed to act on its ballooning debt, on its runaway expenditure, on growing the economic pie, on increasing employment and attracting real investment, then why would you believe that it will do so this year, in the final stages of its life? Budget
2024 is the credibility budget for this administration. Unfortunately, the credibility test is something it has already failed.
We have been falling deeper and deeper into debt for 15 years.
When Gigaba delivered his budget, the debt-to-GDP ratio was nearly 59.26%. In 2019 it jumped to 65%. Let’s put that into further context: it was an astonishing 30% of GDP in 2006. When current finance minister Enoch Godongwana delivered his mini-budget last November, he projected debt to peak at 77.7% of GDP in 2025/2026. He had estimated a peak of 73.6% just 10 months before, meaning that you can’t even trust his forecasts. Even more alarming is the fact that South Africa now spends 20% of tax revenue on servicing its debt.
What South African voters have done since 2009 is the equivalent of leaving an alcoholic in charge of a liquor store.
Back to the question: will the economy be run better in 2024 than it was in the past year?
I don’t see how that’s possible. The ANC is making expensive noises in its election messages: expanded social grants are on the cards, an expensive and possibly ruinous National Health Insurance Bill is on the president’s desk awaiting his signature, and the state-owned enterprises have their hands stretched out for even more bailouts. A very expensive year lies ahead, and the ANC has shown that it does not know the meaning of the expression “live within your means”. For Pretoria, it’s the season to “spend, spend, spend”.
Who will help the ANC rescue this economy? No-one. The ANC has run out of friends. Business has fled the party’s sheer incompetence and inability to implement after six years of believing in Thuma Mina.
Business organisations merely work with the government because they can’t let the country collapse. The love is gone.
The public sector trade unions are in the mix merely so they can continue to gouge huge pay increases from the public purse. But the trade unionists and their members know that what they are doing isn’t in the interests of the country. They are leeching off the state.
Even these trade union members know that consistently above-inflation increases to their wages in a country that has no growth and poor revenues is just not sustainable. Down the road, in a few years, there will be tears.
Godongwana has fought against populists in the ANC for years. He swatted off the “nationalise the Reserve Bank” brigade and others.
Yet he has failed to rein in his party’s addiction to appeasing the trade unions with large increases and has not succeeded in overcoming the ANC’s lack of commitment to implementing reforms that would encourage economic growth and job creation. His colleagues are so clueless at planning they cannot even employ 1,000 medical graduates they themselves have trained for seven years.
The ANC’s economic plans have failed South Africa for six years. Nothing says they will miraculously work in the next year.