Economists say Finance Minister Tito Mboweni will face a huge challenge when he delivers his Medium-Term Budget Policy Statement on Wednesday. The challenges are mainly political in a slow-growing economy.
Mboweni is expected to release a revised economic growth strategy and a plan to address Eskom’s debt. Government is struggling to turn around the economy.
There have been six quarters of declining Gross Domestic Product (GDP) since the start of 2018; while the number of unemployed South Africans stands at 27%, translating to 6.5 million people. Mboweni is expected to make announcements on how much revenue has been collected.
Economists predict there will be a shortfall and no room for Mboweni to make announcements on new tax increases as the consumer is already tightly squeezed.
Government also has to stabilise its debt to GDP and decrease spending by implementing more budget cuts. Economists say Mboweni will have to make clear pronouncements on how government plans to take the economy forward.
Some of the political parties in Parliament want Finance Minister to make the stabilisation of the deficit and reducing national debt his priority when he tables his Medium-Term Budget Policy Statement.
The national debt is estimated at over 50% to the country’s Gross Domestic Product.
The DA wants the wage bill to be slashed by R168 billion and savings directed to education and safety for South Africans.
DA Finance spokesperson, Geordin Hill-Lewis says, “Essential services on which the poor and the public at large rely on in South Africa are being crowded by interest expenditure. As debt goes up, we spend more and more on interest bill every year. Already we spend more on interest than police and fighting crime; soon we will spend more on interest than educating our children.”
‘Decisions on State-Owned-Enterprises’
The FF Plus says Minister Mboweni must take unpopular decisions on State-Owned-Enterprises when he delivers his Medium-Term Budget Policy Statement. The party’s Member of Parliament, Wouter Wessels says Mboweni needs to be tough in dealing with some of the cash-strapped enterprises.
“This budget must balance the books and give direction and there would have to be a lot of unpopular decisions that have to be made to salvage the situation, such as with regard to state entities but the minister is held ransom by the alliance partners to make decisions that will save the country.”
The ACDP wants to see concrete measures to stabilise Eskom. The party says the power utility needs to get its act together after receiving capital injection of about R59 billion spread over two financial years.
ACDP Chief Whip Steve Swart explains, “We would like to see stabilisation of particularly Eskom that has now received an extra R59 billion that has to be found from somewhere and of course we would like to see economic growth being stimulated. This will in turn increase tax revenues and of course, help to balance the books.”