Budget not the right fix

Minister under fire for not solving problem

FINANCE Minister Tito Mboweni came under pressure in Parliament, with parties saying his Medium Term Budget Policy Statement did not provide the medicine required to fix the ailing economy.

This comes as Mboweni said the economy would grow at less than 1%, the revenue would still have a shortfall of R27 billion and the debt would stabilise in 2022/23.

“I present this policy statement against the backdrop of a technical recession in South Africa. The economic expectations at the time of the Budget in February 2018 have not materialised. Since then, the risks to the global growth outlook have become more pronounced.

“Rising interest rates in the US and a stronger dollar reflect a strong US economy. In the medium term, strong US growth will support export growth,” said Mboweni.

He said developing countries were now expected to grow by 4.7% in 2018 and 2019. For 2018, South Africa’s growth forecast had been revised down from 1.5% to 0.7%.

Mboweni said growth was expected to recover gradually to more than 2% in 2021 as confidence returned and investment gathered pace.

He said recently-concluded power-purchase agreements would create an estimated 61 000 jobs and enable investment of R56bn.

Mboweni said spending was projected to be R5.9 trillion over the medium term, but that it would still grow faster than inflation.

“This is a lot of money. We can do more with it,” said Mboweni.

He said government proposed a combination of “re-prioritisation, changes to grant structures and in-year allocations amounting to more than R50bn”.

“Of this amount, re-prioritisation of R15.9bn goes towards infrastructure programmes, supporting industrialisation and the Expanded Public Works Programme. An additional R16.5bn of re-prioritisation will be allocated to various programmes, including funding to restore capacity at the SA Revenue Service,” said Mboweni.

Independent economist Thabi Leoka said revenue collection had underperformed, but the silver lining was that there was a plan to turn things around.

“There’s a lot of focus on infrastructure, and re-prioritisation is also a positive,” said Leoka.

Former finance minister Trevor Manuel said Mboweni, in his speech, had focused attention on the matters which needed to be resolved.

“The message is essentially: ‘Let’s fix what we need to fix’.”

While delegates to the ANC’s elective conference at Nasrec adopted a whole slew of new resolutions, including the establishment of a state-owned bank and land expropriation without compensation, Manuel said this was not the time for new policies.

“I’m glad he went back to the Constitution and the NDP (National Development Plan) and (the) focus on quality-of-life issues, because that is the core measure,” said Manuel.

Despite outlining some of the programmes to rein in state-owned entities and providing direction on the R50bn stimulus package, parties said Mboweni had missed the boat.

Alf Lees of the DA said the government was still pumping money into SAA. “This R5bn bailout is just the current year’s portion of the R21.7bn that SAA requires in order to be able to continue trading at a loss.”

The SACP said it had no illusions about the crisis the economy was facing. “The corruption of corporate capture of the state including the looting, as well as the associate governance decay, mismanagement and maladministration, have severely impacted public resources and by no small measure contributed to the multiple crises in which our revenue and state-owned entities were plunged,” said the SACP.

The IFP’s Mkhuleko Hlengwa said the state had pumped in billions in bailouts to SOEs. “The state gives these entities guarantees to raise money in the capital markets.”

Cosatu general-secretary Bheki Ntshalintshali said Mboweni had wasted a lot of time talking about the huge public sector wage bill.

“To us that is a non-issue. We got an agreement negotiated over a long time in respect of wage negotiations and working conditions. I think he is attacking the wrong people. He should focus more on the people who have huge perks, including himself. He should have started at the top with ministers, with MPs.”

He said Mboweni should “cut at the top where it belongs and be able to recover the money and put back to the fiscus”.