MTBPS: Tito Mboweni’s medicine for ill SA
Cape Town - Finance Minister Tito Mboweni has painted a gloomy picture for the economy as government tries to maintain fiscal sustainability amid the growing Budget deficit and debt service costs.
Mboweni told Parliament, during the Medium-Term Budget Policy Statement (MTBPS) on Wednesday, that government would have to rein in spending, reduce the public wage bill, cut debt and ignite growth in the economy.
In a fiscal outlook for the next five years, Mboweni warned that the debt would reach R5.5 trillion. This is an increase from R3.9 trillion.
“Our revised fiscal framework puts us on a course to stabilise the ratio of debt to GDP at around 95% within the next five years. The stock of gross debt will rise from roughly R4 trillion this year to R5.5 trillion in 2023/24.”
However, to maintain debt stabilisation, the government would have to cut costs. It is projecting a reduction in the public sector wage bill by R300 billion in the next four years.
Mboweni also announced that SAA would get another bailout, of R10.5bn. This is in addition to the R16.4bn previously given to the airline. Mboweni said the money was for the business rescue process.
But he warned on Wednesday that debt was going to lead to a major financial crisis in the country if it was not contained. The debt service costs have shot up to more than R233bn.
Mboweni also announced that the Zondo Commission of Inquiry into State Capture would get an additional R63million to finish its work.
He said the unemployment grant of R350 would be extended for another few months. The government would need an additional R6.8bn for the grant until the end of January.
However, he said there would be no further top-ups for the other grants.
Mboweni said the public sector wage bill would have to be stabilised. The wage bill is currently sitting at more than R680bn, and Mboweni said this needed to be contained. He said Minister of Public Service and Administration, Senzo Mchunu, would have to negotiate with the unions.
However, Cosatu said that it would not take this lying down and would oppose Mboweni’s plan to freeze salaries for public servants, and would only accept a freeze of salaries of Cabinet ministers, provincial MPLs and councillors.
“It was an unnecessary proposal or idea because he knows salaries in South Africa are negotiated. If we say now, how does he take it forward? Our position is that we reject a wage freeze for public servants,” said spokesperson Sizwe Pamla.