Business Leadership SA CEO Busi Mavuso said that despite the country’s “extremely weak economic growth levels”, SA was headed in the direction as the government managed to keep tight control of expenditure and revenue.
She also commended reforms aimed at capacitating local government through Operation Vulindlela, a joint initiative of the Treasury and President Cyril Ramaphosa’s office set up in 2020 to reinvigorate the economy.
The initiative’s second phase is focusing on local government, which has drawn sharp criticism from business leaders and citizens for its failure to roll out basic services such as potable water, electricity, clinics and refuse collection.
Ramaphosa has said the government will collaborate with the country’s 257 municipalities to ensure there is adequate investment and maintenance of the water and electricity systems.
In her newsletter on Monday, Mavuso also rallied behind efforts to professionalise the public service, saying it would reduce political interference in the daily operations of government departments, “creating the conditions for professional, accountable public sector management”.
Regarding the medium-term budget policy statement on Wednesday she said it was another opportunity for the government to signal real progress in improving the management of the country’s finances.
“It can cement the positive sentiment that was helped by the removal of SA from the FATF [Financial Action Task Force] greylist and show that we are worthy of a credit rating upgrade,” the BLSA CEO said.
She said many economists were expecting better numbers than were tabled when the budget was finally passed earlier in the year, “after the debate over a potential VAT increase was resolved”.
“Without extra VAT, the Treasury has relied on increased collections by the SA Revenue Service and the [medium-term budget] will reveal how well that has gone. It has also been keeping tight control of spending through its expenditure reviews, going through government departments and assessing the quality of spending.”
Early indications were that it had been able to fill the gap left by the lack of new taxes and “that it will be able to confirm it is on track to deliver another primary budget surplus this year”.
“That means its noninterest spending will be less than revenue, leaving a modest amount to start chipping away at our huge debt pile. The Treasury has been rebuilding the credibility lost during state capture when our debt levels blew out massively and I expect ratings agencies will start to see that this is now reliable.
“Investors are already convinced — yields have fallen about 1.5 percentage points since the budget earlier this year, helped by a global rally in emerging markets. That means the interest cost on the more than R500bn of debt that the Treasury will raise this year will be about 15% cheaper than it was. That is the reward for fiscal discipline, freeing up cash that can be used on real spending.”
Mavuso said the medium-term budget would be another mark of progress from the destruction of the state capture era.
“I will be watching closely to see whether Treasury can indeed confirm the primary surplus, what the updated debt trajectory looks like and whether there is any clearer plan for accelerating infrastructure delivery,” she said.
“With the many other reforms ongoing across the government, and the clear wins that are being racked up as they happen, we can breathe slightly more easily. It is right to regain confidence that the country is moving in the right direction. The pathway is leading us to deliver the economic growth that will turn around our unemployment crisis and enable our people to build the lives they want.”
Mavuso called on the government to stay steadfast and accelerate reform wherever it could, “but this week it will be comforting to see another proof point that we are on track”.
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.