Tito takes a few risks
REALISTIC: STANDS FIRM AGAINST ANC AND PLANS TO BARTER WITH UNIONS
Minister did not go far enough to boost employment and economic growth, says analyst.
Finance Minister Tito Mboweni presented a realistic budget. The fact that he took a political risk with the ANC left allies with a plan to reduce the public wage bill and indicates a determination to take the country out of the doldrums.
Political economy analyst Dr Daniel Silke, who was in parliament yesterday, also said: “The fact that there are no tax increases indicates a shift in thinking ...
“The minister sees you can’t keep on milking the taxpayer budget after budget,” Silke said.
Another analyst, Zamikhaya Maseti, said Mboweni’s interventions to boost the economy would not go far enough.
The basis for his pessimism was unemployment remaining unchanged at 29.1% for the third and fourth quarters and a projected economic growth rate of 0.9%.
At this rate, the government would fail to achieve the 5% growth by 2030 envisaged by the National Development Plan because when aggregated, the intervention fell nowhere near what the plan projected.
“The interventions will not make an impact on joblessness, will not ignite economic growth. We cannot achieve growth if we move at this pace,” Maseti said.
The government was becoming realistic in how it dealt with issues, shown by the minister’s willingness to take the fight to Cosatu on the need to reduce the wage bill. Mboweni’s willingness to negotiate with trade unions was a good risk he had to take.
“But to what degree can he achieve a buyout from the ANC itself is an important question... There is a lot of grey area there, a lot of the unknown,” he said.
Silke said Mboweni’s intention to cut spending was welcomed. But the debt-gross domestic product ratio remained an Achilles heel.
“Our debt servicing is extremely high; we can still find ourselves in trouble if we don’t service the debt.
“The minister seems to be prepared to take the risk – but the proof of the pudding is in the eating.”
The budget was based on realistic economic issues, “but the devil is in the detail.
“We got to get all the pieces of the puzzle right and ensure we move in the right direction, otherwise we might see taxes increasing next year,” Silke said.
Maseti said Mboweni’s budget was about “business as usual”.
On the increase in social security grants, Maseti lambasted the government failing to discourage dependency through grants and said something must be done to make beneficiaries productive.
He doubted if the government would be able to sustain this considering that the grants bill was going as high as R18 million.
He praised the intervention in the form of R129 billion for state-owned enterprises, saying it would help entities like Eskom and South African Airways pay their debt and interest, to enable them to make profits in the long run. He suggested they should be obliged to come up with realistic turn-around strategies.
The envisaged State Bank is a great idea because government would have its own accounts and pay salaries from a public entity instead of relying on private commercial banks. Also, it would be a black empowerment of a sort.
However, whether the government would be able to enable it to operate smoothly was another question.