Ralph Mathekga

Ralph Mathekga: Mboweni should take us into his confidence on the true state of the economy

2020-02-25 10:36
Finance Minister Tito Mboweni. (Rodger Bosch, AFP, Getty Images)

Finance Minister Tito Mboweni. (Rodger Bosch, AFP, Getty Images)

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While Mboweni may not deliver an aggressive budget because our politics does not allow for such at this point, the minister should not miss an opportunity to tell us the truth about how deep in it we are, writes Ralph Mathekga

Finance Minister Tito Mboweni will, in all likelihood, deliver a bail-out of SOE's themed budget while at the same time trying to seek to stabilise the national fiscus and manage South Africa's mounting debt.

The country is on the brink of downgrading by Moody's, the only sovereign credit ratings agency that has been able stay the execution for a while.

The markets seem to be anticipating the worst; with some speculating a possible further downgrade in the first half of this year.

There is a crisis of confidence regarding the ability of President Cyril Ramaphosa’s administration to make unpopular decisions including retrenching workers at the embattled state-owned entities.

Ramaphosa played Pontius Pilate in his State of the Nation Address; failing to show a willingness to make tough decisions, particularly when it comes to what will happen with state-owned entities such as Eskom.

The President kicked the proverbial can down the road, leaving the tough work for his tough-talking finance minister.

Tito is known for shooting from the hip.

He often openly asks why South Africans insist on owning an entity (read an airline) which should be left where it belongs: the museum of aviation.

The unions are up in arms against any public sector reform that entails downsizing jobs at Eskom and SAA, for example.

The unions are making a sound moral case, which is not necessarily economically sound.

From a moral standpoint, the unions are saying that workers should not be punished simply because some politically connected elites decided to loot state-owned entities.

From the economic point of view, the union’s position against retrenchments at state-owned entities imply that we cannot stop inefficiencies simply because we started it.

Those are projects referred to as Boondoggles; a project where money is spent wastefully and you just cannot stop, due to political reasons!

Therefore, Mboweni will most likely announce a series of bailouts of state-owned entities.

The minster will probably call the packages by a new name, something like Special Purpose Recovery Fund comes to mind.

Our Finance Minister reserves his right to rant about the growing public sector wage bill, as he did in last year’s budget.

This does not mean that the minister will do anything significant about this problem.

In the previous budget, mention was made of a R50 billion that would be saved through reprioritisation and be channeled toward infrastructure expenditure.

I ask myself which government projects will release an amount of R50 billion?

In principle it is indeed possible to reprioritise this amount by deferring some of the projects that we can do without.

The main challenge however is that this exercise will require a high level of efficiency in government departments.

Our public service cannot abruptly operate with strained resources - things will get worse.

While Mboweni may not deliver an aggressive budget because our politics does not allow for such at this point, the minister should not miss an opportunity to tell us the truth about how deep in it we are.

He should certainly remind us of how fast we are falling.

The difficulty with the current social political atmosphere in our society is that it does not allow for national coherence around policy.

Each powerful group lobbies for its own interest, and it is mostly narrowed interests.

In this scenario the budget ends up looking like gifts to various groups that would have lobbied intensely, with the taxpayer left to pick up the tab.

Mboweni should not pander to influential lobbyists, he should consider what is good for South Africans.

If he cannot deliver a good budget, he should at least speak the truth regarding the true state of our finances and our economy.

- Dr Ralph Mathekga is a political analyst and author of When Zuma Goes and Ramaphosa's Turn.

Read more on:    tito mboweni  |  cyril ramaphosa  |  economy  |  budget


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