Minister Finance Tito Mboweni is to be credited for delivering overdue honesty regarding the state of South Africa’s economy. He did so during the medium term budget speech, what some call the mini-budget. It’s also good news that the National Prosecuting Authority’s budget is going to radically increase. But positivity dies there, overwhelmed by a storm we have little chance of clearing.
The intended unbundling of Eskom, and SAA partnership with private companies, will be stopped by unions. The R59-billion Eskom bailout Eskom just received is harsh fact considering that national tax collection will fall short by R53-billion. The alarming R3-trillion in national debt is ‘almost’ happy news when compared to the predicted R4.5-trillion it will reach within 3 years. Wasn’t Mboweni supposed to reduce it? Instead, the interest repayments will cripple us.
The repeated pursuit of NH1, the health plan for all, may be a noble idea but it’s disastrous until Government fixes the current poor state of hospitals and empty staff positions. Like everything else, it will likely be robbed.
Citizens will be angered by the Minister stating that the controversial e-tolls will stay, and that he demanded people begin paying.
Notably, there’s no intention to tackle the biggest problem which is the over-inflated Government staff bill. Freezing the salaries of ministers is so minor as to be inconsequential. The Democratic Alliance stated that 29,000 employees are currently earning more than R1-million per year.
The recently announced 29.1% official unemployment rate (which non-government agencies consider to be far higher) is insidious, kept bad company by the country’s growth rate plunging to 0.5% (compared to the average of 3% worldwide, and 3.5% average for Southern African countries).
Within half an hour after Minister Mboweni’s speech, the rand dropped 30 cents to the dollar. We can only hope that, on Friday, Moody’s doesn’t become the last major rating agency to drop South Africa’s investment grade to junk. Either way, it’s likely that taxpayers will carry a bigger tax burden come February 2020.