Key points from the Medium Term Budget Policy Statement

Wednesdays MTBPS was Malusi Gigaba’s first budget. It was eagerly anticipated and I was looking forward to hearing how he plans on tackling pressing issues such as South Africas weak economic growth, the dire state of SOE’s and government spending/debt. However it was mostly bad news with a few plans here and there but nothing to write home about. Economic growth projections have been revised to 0.7% for 2017, down from 1.3%. It is expected to recover slowly reaching 1.9% in 2020. Consolidated budget deficit is 4.3% of 2017/18 GDP, nearly 15% of main budget revenue will be spent servicing debt by 2020/21, tax revenue is expected to fall short by R50.8 Billion in the current year and there has been a deterioration in business and consumer confidence. In short, he basically said that things are bad but we (government) have implemented changes and turnaround strategies in some areas and we are planning on doing more. But then he continued to say that “It is not a lack of planning that is letting us down, our greatest challenge remains effective implementation and slow pace in many instances. We cannot expect the economy to slow down to the speed of government; government must speed up to meet the needs of the economy.” To me it sounds like he’s saying government is failing, something we all knew.

SAA will receive another R4.8 billion bailout. The Minister remains adamant that the airline should (will) not be sold but on the bright side, a new board was appointed and he spoke about bringing in a strategic equity partner. “Despite it’s current challenges, government remains convinced that retaining a national carrier is in the public interest” he stated. A portion of governments Telkom shares will be sold to ensure that the expenditure ceiling is not breached.

Eskom will be given a new board before the end of November 2017. Government is concerned about the power utility’s governance, leadership and financial management failures but Malusi Gigaba insisted that “Eskom is simply too important to the country to fail, and we will not allow it to”, I fully agree.

Education sector is expected to spend R44 billion on constructing new schools and refurbishing existing schools, libraries and laboratories.

Unemployment rate remains high at 27.7%. I think this needs some serious attention, it could lead to a brain drain (amongst other things), so I would like to see a detailed “Unemployment Reduction” strategy. More than 30 million South Africans live on less than R1000 per month. Our Gini Coefficient is extremely high with 95% of our wealth in the hands of 10% of the population.

The minister also  spoke about the National Development Plan and how far they have come in terms of implementation. Overall it was like a bad school report card, disappointing. I appreciate his honesty and transparancy but he could have done more to restore some sense of hope.

 

 

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