It was ever thus with the presentation of the national budget: a raft of documents; a speech presented in good humour, and a passing sense of relief.
This newspaper has written at length about the travails of a country in trouble, and we do not need to list them here again, but the presentation of a budget always serves to remind us that there are good and sober technocrats in the Treasury.
If politics is the art of the possible, it was finance minister Enoch Godongwana’s job on Wednesday to show that this is true in the budgetary process as well.
His challenge, with walls closing in on four sides, was to address Eskom’s debt burden, to grant some small relief to our country’s poor for the dire circumstances, to prop up a private sector groaning under the pressure of collapsing electricity and logistics services, and to keep on side jumpy markets watchful for fiscal slippage. His most important role was to do this in a way that seems believable.
While the market will express its view in the coming hours, it looks like he may have just about done it. Quite how he has managed to square this circle will come out in the days ahead. In broad strokes, improved revenue forecasts, some sleight of hand on the Eskom debt swop, declining primary energy costs, high-performing sectoral contributions from services and agriculture, and the re-opening of China’s economy despite a Covid-19 pandemic there, have created something in the region of R100bn of wriggle room for the minister since the medium-term budget policy statement (MTBPS) in October.
This may mean that some assumptions that need further interrogation seem less critical, but are worth mentioning in any case. The conditions attached to the Eskom bailout of R254bn, and the assumption that the existing coal-fired fleet of power stations can be brought back to their original equipment manufacturer specification, require careful understanding.
The assumption that Eskom will be able to implement Nersa’s tariff increase of 18.65% faces political headwinds, not least from the minister’s own boss, President Cyril Ramaphosa, who has decried it as impossible in the current sociopolitical milieu.
A public service wage bill increase of 3.3% is fiscally sound but seems politically vulnerable. Whether that gets across the line also requires some thought.
But in the broadest terms, Godongwana has answered the Eskom debt question, has given clear timelines on fiscal consolidation that seem credible, has created room for the extension of social relief grants begun during the Covid-19 pandemic, has moved as best he can to alleviate cost pressures especially in the food value chain associated with power cuts, and has generally kept a lid on taxes and levies.
In what may be a last-ditch attempt to stave off “greylisting”, he has also managed to find some additional cash for the Financial Intelligence Centre. In truth, the Financial Action Task Force’s decision is likely to have already been made, and this cash injection bodes well for our future path of either finding our way off the greylist, or for remaining off it.
One point remains abundantly clear: the size of the Eskom bailout will, in news terms, obliterate much of the rest of what is in this year’s budget. On top of existing bailouts for Transnet to the tune of R6bn and the R24bn for Sanral to pay off the Gauteng Highway Improvement Project debt, further bailouts of R1bn for SAA and R2.4bn for the SA Post Office remind us of what has been lost.
Today, Godongwana and his team can be commended for what they have managed to achieve but he has, to stretch a metaphor, pulled a rabbit out of a hat that ought never to have been in our wardrobe.
In various addresses recently, Ramaphosa has explicitly acknowledged the long tail of state capture. We can, at another time, discuss the culpability of those now in government for what happened then. Whatever the case, in this budget the damage is there for all to see.
The sheer scale of the cost of addressing the damage done to this country by the Jacob Zuma administration — and the vast, unknowable opportunity cost of it — is now right there on the balance sheet in black and white. This budget is, therefore, as tragic as it is good.
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