Make haste to get our economy out of the doldrums

FINANCE Minister Tito Mboweni has laid down the law. There is no more money left in the fiscus.

South Africa is scratching at the bottom of the barrel and struggling to survive. At the current rate of borrowing, this is unsustainable in the short-to-medium and long-term.

Mboweni has said South Africa is borrowing R2.1 billion a day. For any country wishing to get the economy back on track, this is unsustainable.

When the debt was sitting at R31bn in 2009, South Africa was doing better. But now the debt is threatening to blow the fiscus, leaving nothing to eat.

But Mboweni is facing a bigger fight than trying to cut the debt, which will reach 95% of GDP in the next five years. The unions are bracing for action after Mboweni announced the public sector wage bill would be trimmed by R300bn in the next four years, and part of this effort will be to freeze wages for public servants and reduce the salaries of politicians.

The unions have fired a warning shot: “We reject your proposal Mboweni.”

This is the next big fight Mboweni faces. The public sector unions have complained the government has been sacrificing public servants while the state was looted. They are paying for the sins of corruption.

The unions have warned they will not allow their members to face salary freezes while those who steal from the government are not facing the criminal justice system. This is the battle that will be waged for the next few months. The fight will decide the next course of action for Mboweni.

But the question remains, irrespective of the impending fight between Mboweni and the unions: How will the government get out of the quagmire?

South Africa is on a slippery slope to economic oblivion, and Mboweni warned about this in his February Budget. This might come true soon.

Actions taken over the next few months and years will decide the path the country takes, whether one that is fiscally sustainable or one that leads to economic collapse. The signs had been there for some time, but the government was slow to take action that would prevent the collapse of the economy.

It needs to take decisive action and act now, to prevent the implosion of the economy as this will condemn future generations.