Finance minister Tito Mboweni’s budget left me both inspired and depressed. The presentation was impressive. It went some way to countering the narrative, which he himself in fairness did much to promote, that he was disinterested in the job, and no longer had the patience for outdated concepts such as collective responsibility.
Utterances about closing down SA Airways (SAA), in contrast to official policy, also buttressed the idea that he didn’t have the necessary discipline to thrive in government.
The presentation didn’t give one the impression that the person giving it was either not interested or in a rush to get out of the administration. He left out the possibility that he might still be around after the elections in May.
The budget itself was rather grim. To describe it as disappointing would imply that there were exceedingly high expectations going into it. With the economic performance having deteriorated and no discernible progress towards fixing or selling the broken state-owned enterprises (SOEs) since the publication of the medium term budget policy statement (MTBPS) in October, the numbers could only get worse.
So it came to pass. The budget deficit for the current fiscal year will be 0.2 percentage point higher in 2019 than predicted in October, rising to 4.5% in 2019/2020, which will be the widest in a decade. So the country’s debt will rise and the ratio to GDP will now peak at just over 60% in 2023/2024.
Considering the government’s less than stellar record of forecasting in recent years, you can almost count on these being missed too. But officials did offer some hope that just maybe there might be some good news coming from the SA Revenue Service (Sars), which hasn’t been factored into their forecasts.
It’s been many years since Sars has been a source of good news. The bad news this time is that revenue collection is expected to fall short by R43bn compared to 2017’s estimates. That’s up about R15bn from a number announced during the presentation of the MTBPS.
With efforts to fix the institution in full swing, the Treasury is hoping that the right sort of overshoots will materialise in coming years, meaning that their own forecasts will be proved to be too pessimistic. That’s probably part of the message they’ve been pitching to Moody’s Investors Service in the past week, as they work to preserve the country’s remaining investment-grade rating.
Even in its grimness, which the Treasury officials would prefer to call realism, the budget was encouraging. Mboweni came in about four months ago promising that there would be no holy cows. He reinforced that theme when he mentioned what remains taboo among the ANC benches.
“Isn’t it about time the country asks itself the question: do we still need these enterprises? If we do, can we manage them better? If we don’t need them, what should we do?”
Those who watched the speech noticed that ANC MPs didn’t exactly jump up to give him a standing ovation on this particular point. From the need to contain the public service wage bill, to ensuring accountability at SOEs, Mboweni ticked all the right boxes and one got a sense that the government is finally getting serious on its core job — governing.
No more free lunch for failing SOEs, he said. If they ask for money, they will be required to hire a so-called chief reorganisation officer to be the “eyes and ears” of the government.
By all means consultations with labour should continue, but the government can’t have never-ending negotiations with unions who will never compromise. This is probably where the depression comes in. After reading the speech and being impressed by the honesty and passion for fixing the country, the next thought is the sad reality that very little of it will come to fruition.
Mboweni had barely finished speaking and there were already grumblings that elements in the ANC were opposed to the plan to create a separate transmissions subsidiary of Eskom, and would seek to undermine the policy.
News elsewhere in this publication reveals bitter infighting among the different factions in the ANC reached explosive proportions by the end of last week. This only serves to reinforce the feeling that President Cyril Ramaphosa is going to be preoccupied more with managing the party than governing the country.
For all of Mboweni’s words, it’s hard to be optimistic, knowing that unions will sabotage any attempts at reform with no pushback from the government. Especially not ahead of the elections.
It’s back to the saying about politicians in troubled democracies knowing what they need to do, but not being able to work out how to also stay in power. And when faced with that binary choice, they tend to go for the latter.
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.