No reprieve for economy
THE budget delivered by Finance Minister Pravin Gordhan last week revealed an interesting reality: whoever wins the ANC leadership contest in December and later succeeds Jacob Zuma as president of the republic will have a massive job on their hands to turn the declining fortunes of the country around.
It is common cause that the economy has been in bad shape for nine years; growth is around 1% and jobs are hard to come by, not just for the unskilled but for university graduates as well. Government debt stands at R2.2-trillion.
Worse, the ANC alliance has taken its eye off the ball and is consumed by internal factional battles over who will succeed Zuma and gain control of the public purse.
So the urgent task of taking the tough political decisions to stabilise the economy and dig ourselves out of the debt hole is not being attended to. Which means that by this time next year, the Treasury is most likely to have a massive budget shortfall which it will have to plug by either increasing taxes or borrowing or both.
Such a course of action is not sustainable as it is likely to lead us into a debt trap and may force us to approach the World Bank or International Monetary Fund to seek a bail-out.
As Gordhan revealed, SA has a tiny number of people who are relatively well-off. Now about 103 000 people who earn about R1.5m a year will pay 45% tax.
The obvious question is, if the economy does not grow and create decent jobs that expand the tax base, where will the finance minister find the money to plug budget shortfalls in the future?
The tragedy for our country is that politics, not the economy, dominates our national discourse. Far too many people in government and the governing alliance have no idea how the economy works – and don’t know how to create sustainable private sector jobs that can expand the pool of taxpayers.
Until the balance of power in the governing party shifts in favour of technocrats who know how to make things work, the future prospects for our country are not at all promising.