All eyes on Godongwana to come up with real solutions
Populist demands will not solve SA’S long-term needs
The markets are looking to the finance minister to provide clarity on several key issues when he tables the Medium Term Budget Policy Statement on Wednesday.
Chief among them is government’s approach to Eskom debt, public sector wage bill and social relief measures.
Maarten Ackerman, the chief economist at Citadel, says all eyes will be on Enoch Godongwana to see if he will prioritise pragmatic policies that stimulate real business growth and job creation, instead of bowing to populist pressures that prioritise social spending but have no lasting positive impact on the country.
“South Africa is still stuck in a balancing act between weak growth and populist needs that will continue indefinitely, such as the Basic Income Grant,” says Ackerman. “As a country it is vital that South Africa gets the economy going to address poverty and inequality in a sustainable way.
“In terms of South Africa’s macro-economic outlook, it’s essential to note that there was yet another revenue windfall in addition to the revenue overruns in recent years. So, we’ll need to see what the finance minister does with that. We’d like to see the windfalls being used productively – not just on once-off, temporary social spending that does little to nothing to drive economic growth,” adds Ackerman.
The government is also staring down angry public sector workers who are looking for a healthy increase to their salaries. Godongwana in the February budget flagged the public sector wage bill as a significant risk to the country’s purse.
Acting Public Service and Administration Minister Thulas Nxesi, during his oral reply at the National Council of Provinces last month said the government has slowed growth in the public sector wage bill through cost containment measures. The share of compensation of employees to total consolidated expenditure decreased from 34.5% in 2019/20 to 31.6% in the 2022/23 financial year.
The government believes the 3% salary increase offered to public servants is “generous”. This stance has led to a deadlock with labour unions and a debilitating industrial action seems likely. Cosatu spokesperson Sizwe Pamla said the federation expects Godongwana to signal a move introducing a basic income grant.
“The rollout of the Special Relief Dispensation Grant has been one of the largest poverty relief measures since 1994. It has helped more than 10-million unemployed persons buy food and look for work. It needs to be extended and used as a foundation for a basic income grant.”
Cosatu also said it expects Godongwana to announce a debt-relief package for Eskom.