Mboweni’s 5-year plan to cut debt
Bailouts go on despite calls for them to end
FINANCE Minister Tito Mboweni has walked a tightrope in his Budget, with measures to cut expenditure and plans to reduce debt in the next five years.
He said yesterday this was not an austerity Budget as had been alleged by others, saying if that was the case they would have cut down on social grants.
However, the government has given Eskom a bailout of R31.7 billion, SAA another R4.3bn and the Land Bank a bailout of R7bn.
Mboweni did not mention the bailouts in the speech, but the details are contained in the Budget review. This is despite opposition parties calling for an end to the bailouts.
“Government allocated R56bn to Eskom for 2020/21 and allocated R31.7bn for 2021/22, subject to compliance with the conditions of the Special Appropriations Act,” reads the Budget review.
In the review national Treasury said they had extended the R350 grant for the unemployed until April, but wanted to bring down debt levels with debt servicing costs now exceeding health expenditure.
In his speech, Mboweni said they had allocated R10bn for the procurement of vaccines over the next two years to fight Covid-19. Due to uncertainty over the pandemic, the government had increased contingency reserves from R5bn to R12bn.
Mboweni said it was expected the econonmy would rebound this year, with growth of 3.3%. The government would not increase taxes. But he announced an increase in “sin” taxes. “From today, a 340ml can of beer or cider will cost an extra 14c, a 750ml bottle of wine will cost an extra 26c, a 750ml bottle of sparkling wine an extra 86c, a bottle of 750ml spirits, including whisky, gin or vodka, will increase by R5.50. A packet of 20 cigarettes will be an extra R1.39, 25g of pipe tobacco will cost an extra 47c, and a 23g cigar will be R7.71 more expensive.”
National debt would continue to rise, from 80% of GDP to 88.9% in the next five years.
“Debt is now expected to stabilise at 88.9% of GDP in 2025/26 – down from a projected 95.3% of GDP estimated in the 2020 MTBPS (medium-term Budget policy statement). This is as a result of a decline in the tax revenue shortfall since the tabling of the MTBPS, which resulted in improved cash balances,” stated the Budget review.
The review said the public sector wage bill would be reduced by R303bn in the next three years. However, this year the government and unions would enter into a new round of wage negotiations, and the outcome was unclear.
National Treasury said the wage bill consumed a large portion of the budget and must be reduced.
Mboweni said Public Service and Administration Minister Senzo Mchunu was in discussions with unions on the new wage talks this year.
Mboweni said the social grants would be increased. The the old age, disability and care dependency grants would be increased by R30 to R1 890. The war veterans grant would rise by R30, to R1 910, while the child support grant would rise by R10 to R460, and the foster care grant by R10 to R1 050.
POLICE unions in the country have lambasted Finance Minister Tito Mboweni for his alleged failure to deal with shortages of staff in the criminal justice sector.
The Police and Prisons Civil Rights Union (Popcru) and the South African Police Union (Sapu) sang from the same hymn book in their condemnation of Mboweni’s failure to comment about the continuing public service wage dispute.
Despite their rivalries, the unions were unanimous in their views that Mboweni needed to talk about the employment of more staff to beef up the fight against contact crimes such as gender-based violence (GBV).
Sapu spokesperson Peter Ntsime said his union was worried that nothing was mentioned about employing more staff.
He said that there was a shortage of staff in the police and correctional services, yet Mboweni chose to ignore this matter in his Budget speech.
Popcru spokesperson Richard Mamabolo also shared the same sentiments. He vowed that his union would sit within the next two weeks to map out a plan to challenge Mboweni’s speech.
Mamabolo said the R1.8bn allocation to the Justice and Constitutional Development was not aimed at improving the workers’ conditions of service and capacity in that cluster.