SOUTH AFRICA’S ECONOMIC TIGHTROPE TOUGHER STILL AS DEBT HITS THE ROOF
THE outlook is not good. That was the harsh assessment of South Africa’s Finance Minister Tito Mboweni on Wednesday.
This is not news to South Africans, who experience high prices, less money and joblessness daily.
Even with inflation at just over four per cent and with an offering of the country’s sovereign debt garnering $5 billion, the rest of the economic ture is bleak.
Revenue from tax is down by more than $3 billion and is projected to fall again in the next fiscal year. The national debt could reach $300 billion by 2023 on current trends – 70 per cent of the GDP.
There is also no obvious solution to the problem of Eskom, the behemoth of the economy, which is losing money due to poor management picand outdated electricity-generating systems.
No plan seems to be on the horizon as far as Eskom goes, with unions against privatisation.
The vast utility – Africa’s largest, with 46,000MW of installed capacity but running only at about two-thirds efficiency – seems impossible to render profitable.
The government its sights on sorting has out set the monster that is eating up state funding at $1.5 every year.
Stabilising Eskom and its finances is critical for the recovery of South Africa’s economy.
Mboweni’s assessment of the utility and the economy were underscored by his call for a “prayer”.
The minister said his midterm budget speech was not the time for poetry “but to speak about hard facts and figures”.
He admitted that one of the problems is the bloated public wage bill.
But union and communist allies of the ruling African National Congress were adamant before and after Mboweni delivered his address that they would never allow mass retrenchments – at Eskom, state-owned enterprises (SOEs) or government departments.