SA should not underestimate the damage that last week’s budget postponement will have on the country, says commentator, author and journalist Justice Malala.
Speaking on a panel hosted by financial services provider PSG, Malala called the postponement of finance minister Enoch Godongwana’s budget speech a “spectacular failure in political management”.
The budget speech, initially scheduled for last Wednesday, was postponed to March 12 at the eleventh hour after coalition partners rejected the Treasury’s proposal to raise VAT by two percentage points, arguing that the move would put untenable pressure on SA’s poorest households.
“Everyone in that cabinet, from President Cyril Ramaphosa to the DA ministers, knew this day was coming. They could have discussed this among themselves. This did not need to happen, so there will be a huge impact on the credibility [of the government],” said Malala.
“We mustn’t underestimate the damage that this does to our country.”
Malala said that while the budget delay was unlikely to break the coalition, it raised questions about SA’s economic trajectory and governance under the GNU.
“The GNU gave SA hope that we’re breaking from the past. We can’t afford these constant bumps, which keep on bringing up doubt,” he said, referring to the recent friction among GNU members over the implementation of the expropriation act, the Bela bill and NHI.
This comes at a time when the stakes are particularly high given the rapid deterioration of SA’s relationship with the US in recent weeks, which culminated in US President Donald Trump signing an executive order to freeze all US aid to the country.
Malala warned that that aid freeze was merely an “opening gambit”, with more pain to come in terms of SA-US relations, particularly with a review of the African Growth Opportunity Act (Agoa) looming.
SA’s rich endowment of minerals, which the US needs, such as manganese and platinum group metals (PGMs), should provide some leverage in these negotiations. However, he warned that the US cabinet and advisers to the Trump administration had SA in their crosshairs.
He pointed out that some Republican legislators in Congress had been calling for SA to be kicked out of Agoa since before Trump’s administration, while US secretary of state Marco Rubio recently said he would not to attend the G20 summit in opposition to certain SA policies.
“As a country, we must be cognisant that the geopolitical landscape has changed. We are in a very strained period in our relationship with the US and that is going to be tough,” said Malala.
“We can’t afford fumbles like we saw with the budget postponement. It’s a step back and it shouldn’t happen, particularly with the stakes so high.”
Malala pointed out that the budget represented an opportunity for the GNU to outline fundamental reforms and set the tone for SA’s economic direction, with SA’s debt-to-GDP ratio having grown from 23.9% in 2008 to about 75%.
He called for a stronger focus on economic growth through structural reforms, criticising the controversial two percentage point VAT increase and other fiscal measures being considered and arguing that more attention be given to government spending.
“We don’t necessarily spend too much; we just don’t spend effectively. Capital spending is not prioritised and the recent public sector wage bill has created further financial pressure without a clear way out,” he said.
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