Opposition parties are not impressed with finance minister Tito Mboweni’s medium-term budget policy statement (MTBPS), criticising the government for the continued bailout of SAA and the country’s increasing debt.
The DA said Mboweni has abandoned his commitment to get debt under control by 2023, and abandoned his commitment to stop bailouts of SAA.
DA MP and shadow finance minister Geordin Hill-Lewis said South Africans will continue to pay for failing state-owned entities and suffer the consequences of higher debt.
This as the budgets of all 41 departments were cut to fund SAA’s business rescue plan, and as Mboweni announced that the government is borrowing at a rate of R2.1bn a day.
“South Africans will continue to pay for a zombie state company, and will continue to suffer the consequences of ever-higher debt; that is why today’s medium-term budget must be considered a failure,” Hill-Lewis said.
He said granting another R10.5bn to bail out the ailing state-owned airline, on top of the R16.4bn allocated in the main budget earlier in 2020, showed the ANC’s disregard for the poor.
Ahead of the medium-term budget, the DA picketed outside parliament against a bailout for the national carrier, which has not been profitable for almost 10 years.
“This budget has undermined the credibility of the finance minister and the National Treasury,” Hill-Lewis said.
Meanwhile, the EFF said the national carrier should “not be sold to anyone, because the bidders will be foreign companies which will not care about the strategic importance of a national airline”.
“Those who assess the importance of SAA just on superficial balance sheets are shortsighted,” the party said.
Despite this, the EFF called Mboweni's MTBPS “predictable and underwhelming”.
The ANC caucus in parliament welcomed the government's decision to fund SAA’s revival, saying the airline was an agency of value-added economic activity for the country.
“A restructured SAA operating efficiently and on commercial principles will also positively contribute to the economic recovery of the country. It is reassuring to know that the funding of SAA will not result in further debt as funding was raised through adjustment within the current budget,” the ANC said.
The IFP said the MTBPS spoke directly to the consequences of poor financial and economic management.
“Our country would not find itself knee-deep in debt, with a debt-to-GDP ratio of 81.8%, if we had adequately prepared during the past few years, sans the difficulties of Covid-19,” the party’s deputy president and finance spokesperson Inkosi Mzamo Buthelezi said.
“South Africans now know where the money will come from to fund the ‘miracle targets’ as set out by President Cyril Ramaphosa in his recent economic reconstruction and recovery plan address to the nation,” he said
Buthelezi said the alarming rate at which the country is borrowing to service debt costs means SA will run the risk of a debt trap, which will compromise its sovereignty as a state.
The IFP also came out against the continued bailout of SAA, saying, “We cannot continue to throw money at non-financial restructuring plans.”
The Freedom Front Plus (FF+) said Mboweni found himself in a “checkmate position”, which was evident as the budget deficit already amounted to R770bn. The government’s total debt burden now amounts to a staggering R3.9-trillion and will spike to R5.8-trillion by the end of the current medium financial term.
“The minister has his back against the wall and yet he still allocates R10.4bn, which should have gone to local government, to SAA as an umpteenth lifeline, despite municipal services across the country being terrible,” FF+ leader Pieter Groenewald said.
‘Lacklustre performance’
Union federation Cosatu, an ANC alliance partner, said while there were some positive policy proposals in the MTBPS, it does not believe the medium-term budget is “bold and imaginative” enough to extricate the economy from the doldrums and put it on a sustained growth and development path. “This was a lacklustre performance by policymakers and it represents another missed opportunity,” Cosatu spokesperson Sizwe Pamla said.
On the public wage freeze, Cosatu said the government needs to “stop bullying” public servants.
“One minute these workers are an essential service and are heroic front-line workers, but when it comes to remuneration, they are treated as glorified slaves. It is these workers’ pensions that have built and are propping up this economy,” Pamla said.
“The government must honour the 2020 wage agreement and engage in negotiations in good faith with workers on the next three-year agreement.”
He added that any talk of a wage freeze for lowly paid public servants will be regarded as a direct attack on collective bargaining.
LISTEN | Dissecting Mboweni's MTBPS with Investec's Annabel Bishop
Subscribe for free: iono.fm | Spotify | Apple Podcasts | Pocket Casts | Player.fm
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.