Durban - Business Unity South Africa (BUSA) has said that following minister Tito Mboweni's medium term budget speech, it was clear that he understood the magnitude of South Africa's financial crisis, but that the rest of government did not.
Mboweni tabled his Medium Term Budget Policy (MTBP) statement in parliament on Wednesday afternoon. Among other things, the minister said that the country's budget deficit would average 6.2 % and, with its debt and debt-service costs continuing to rise, the debt to GDP ratio wold reach 71.3% in 2022/23.
"Unfortunately, while the Minister of Finance has identified that South Africa 'spends more than it earns'; that 'things need to be done differently'; and 'there is no time left to act'; there is little that indicates the rest of government understands the seriousness of the economic crisis. BUSA recognises that given the state of the country’s economy and treasury, the minister’s options were constrained," said the organisation.
While Mboweni recognised that government could not continue to throw money at Eskom and other state-owned enterprises, it was yet to present a clear plan to resolve the financial crisis at the power utility, said BUSA.
Additionally, it was "deeply" concerning that Eskom board member Busisiwe Mavuso told a parliamentary committee hearing on Tuesday that the board was under political pressure to avoid making difficult business decisions.
"The National Treasury concedes that economic growth is expected to be a mere 0.5% in 2019. We agree that this is simply not good enough, considering the needs of the country. This paltry growth means there is a revenue shortfall of R53 billion; a consolidated budget deficit of 5.9% and a debt to GDP ratio of 70% by 2022/23. The budget deficit, increased debt and persistently low growth does not inspire confidence that government has done enough to deter further credit ratings downgrades.
"The plans to reduce expenditure by R150 billion over the next three years – and achieve a main budget primary balance by 2022/23 - will require determined political leadership by the President and the support of his cabinet. To date, efforts to reduce state expenditure and the public service wage bill, has not produced the desired results."
The organisation said that increased funding for the South African Revenue Service (SARS) and the National Prosecuting Authority (NPA) offered hope that those responsible for the poor state of the fiscus would be prosecuted, convicted and their ill-gotten gains recovered.
There was little in Mboweni's speech that showed how government would substantively implement the National Treasury document: Economic transformation, inclusive growth and competitiveness: Towards an Economic Strategy for South Africa, said BUSA.
"An economy in crisis – like South Africa – cannot be fixed by making small incremental reforms. The Treasury economic strategy document outlines a significant number of growth-enhancing initiatives that meaningfully boost business and investor confidence and stimulate the economy, at minimal cost."
Although the strategy was not a "silver bullet", decisive implementation proposals introduced by Mboweni "could do much to boost business and consumer confidence and lay the foundation for accelerated economic growth in the coming years".
"The President and his cabinet must take the lead and show unequivocal public support and political will in ensuring the quick and effective implementation of key proposals in the economic strategy document and the MTBPS. Hard decisions are required to clearly demonstrate implementation."