It seems like our politicians generally have a habit of admitting to faults and failures but never come up with solutions or plans with measurable targets to resolve matters. So for that reason, I was not exactly interested in this years medium-term budget policy statement. I already knew that the minister would tell us how bad the economy is performing and how we need to start doing things differently (he also did not disappoint with the bible quotes). What I did not expect was his list of solutions and cost-cutting measures.
I know a lot of people were not happy with some of the ministers’ plans but I think the statement in its entirety had improved in that it offered solutions instead of simply stating the ugly facts. This gives us a basis on which to start debates and hopefully come up with effective and sustainable solutions.
If you keep tabs on our economic trends you would already know that our economy is not performing well. So besides the numbers, I also expected reasons why we are where we are and of course plans for mitigating factors that negatively affect our economy.
In a nutshell, our expenditure continues to exceed our revenue and our national debt is increasing. National debt exceeded R 3 trillion this year. The economy is expected to grow by 0.5% in 2019 and slowly rise to 1.7% in 2022. Total revenue is expected to be 4% less than the February projections. Consolidated budget deficit is projected at 5.9% of GDP and consolidated government spending totals R 6.3 trillion.
Cost-cutting and growth measures included reducing the public wage bill, prioritizing job-creating sectors such as agriculture and tourism and subjecting state-owned enterprises that require financial support from government to certain “pre-conditions and principals” (such as not giving managers who fail to meet basic financial targets and service objectives bonuses). Even if the economy was doing well, they should not have been receiving bonuses. He went on to say that state-owned companies must learn to stand on their own feet and that in the future, Eskom will no longer receive bailouts, it will however receive cash in the form of loans.
The minister also put to rest arguments around the nationalization of the reserve bank. He stated that even though we do not own the bank, the national revenue fund received 90% of the profits. “It is a beautiful arrangement, we do not have to invest any money in the bank, but we get almost all the profits plus taxes”. I am still against nationalizing the reserve bank simply because I think there are more pressing issues that we should be dealing with right now.
We might not agree with Tito Mboweni’s proposed solutions and knowing the governing party, their plans might not even be implemented. However, I am glad that for once we were given some form of action plan instead of being told of dreams and hopes because like the minister said: “Hope is good but it is not a strategy”.