JOHANNESBURG – Finance Minister, Tito Mboweni will table the 2019/2020 financial year budget at a time of heightened anxiety about South Africa’s economy.
The numbers simply do not look good. Low growth projections, high unemployment (particularly amongst the youth), escalating inequality and a steady climb of debt-to-GDP with National Treasury worryingly forecasting this to reach almost 60 percent in 2023/24 – surely to trigger IMF and World Bank interventions.
The resultant consequence has been the regressive increase in debt servicing costs which now stands at R180 billion annually.
From President Cyril Ramaphosa’s State of the Nation Address (Sona) it was very clear that government, buoyed by election fever, was over promising with high-level plans while anchored in low-level efficiency. The realities of the upcoming budget will be a moment of sobriety in comparison to the utopic honeymoon promises of Sona 2019.
And this is precisely why this budget needs to move away from the misguided rhetoric of the governing party and present a pragmatic economic agenda of plans and solutions with a bias towards growth, development and sustainability. It needs to be a responsible budget, not an election budget.
The Minister must, therefore, focus diligently on the following:
- Education to produce the technical and innovative skills, knowledge and expertise required by the new inclusive economy and jobs market;
- Health accessibility to secure a healthy workforce to maximise productivity. This requires an injection into health infrastructure, maintenance and a massive clean-up and renovation of existing facilities;
- Local Economic Development wherein new local economic niches are prioritised and beneficiated to maximise potential yield. This requires a new focus of building up local government capabilities on key areas of water, road, energy and human settlement infrastructure planning;
- Redirected funding away from national government to provincial and local governments as drivers of economic growth and development;
- The minister will have to live up to the expectation of dealing decisively with the Eskom problem which currently stands as a national security risk as the country operates in a climate of darkness, to the detriment of growth and business;
- Generally, the budget must convincingly present a comprehensive new direction for state-owned entities, which must include but be not limited to the gradual implementation of public-private partnerships to stave off the undue burdens on an already strained fiscus in the form of endless and unsustainable bailouts;
- The challenges presented by porous borders must be confronted to combat the illicit of flow of trade, goods and people. The country is bleeding money because of poor border management to the benefit of organised crime syndicates. Moreover, the uncontrolled flow of people into the country is burden on services, infrastructure and national security;
- The tax regime will need to overhauled progressively in favour of the poor and the emerging middle class, this means VAT reductions and suspending fuel taxes.
- Focus should be on the trimming of government fat and eradicate government wastage; and also increases for top earners. Tax relief is necessary for the struggling poor and middle class; and
- South Africa being a mineral-rich country needs long term strategic planning to secure maximum production and ensure job security as to arrest the plunge in the sectors such as gold which have seen production fall by 4.8 percent year on year.
It’s a budget of hard choices that will attract investment and inspire confidence. The budget will have to provide certainty by assuring the employed of job security, the unemployed of job opportunities and investors of a conducive environment to do business.
It is our hope that Minister Mboweni will table a budget that addresses the immediate, short- to medium-term and long-term challenges facing our nation. If the ANC is at all serious about growing our economy, lifting our people out of poverty and addressing inequality, then Minister Mboweni would do well to follow our recommendations.
Mkhuleko Hlengwa is IFP national spokesperson. The views expressed here do not necessarily reflect those of Independent Media.