On Friday morning, Finance Minister Tito Mboweni said he refused to be the "minister of bailouts", and fought back against critics of his growth plan, while acknowledging that the economy is performing much worse than forecast.
Mboweni said Treasury’s growth projection of 1.5% this year turned out to be "totally wrong".
"The assumptions underlying the forecasts have clearly changed ... the actual deficit now is probably much higher," Mboweni said at a banking industry event, according to a Reuters report.
Earlier this week, Moody's - the only credit rating agency that still believes South African government bonds aren't junk - lowered its growth forecast from 1% to 0.7%.
Mboweni's growth plan
While Mboweni acknowledged that there are "gaps" in Treasury's economic policy discussion paper which was released last month, he hit back at critics. The document outlines initiatives to boost growth to 3% and create over one million jobs.
It included proposals to speed up of the auction of spectrum, to reintroduce a law to cut down on red tape, to simplify onerous visa regulations, and for Eskom to consider selling coal-fired power stations.
While the ANC caucus welcomed Mboweni's plan, the ANC's alliance partners, Cosatu and the SACP, expressed dissatisfaction. Ahead of the September 15 deadline for responses to the plan, Mboweni said Cosatu and the SACP have not yet submitted their views.
Re Treasury’s economic strategy paper, Mboweni said he was disappointed with response so far. "The responses to the document have been very very poor ... there has been nothing for example from SANCO, or Cosatu. Nothing from the SACP or even the Chamber of Mines"— Sozaboy (@MfunekoToy) September 13, 2019
Telkom Group CEO Sipho Maseko also slammed the plan as being "ill-thought-out", in particular the plans to auction off spectrum.
According to one report from the summit, Mboweni fired back on Friday, calling in question Maseko's objectivity.
@tito_mboweni questions the failure to declare conflict of interest by the Telkom CEO in his critique of our draft macroeconomic policy.— lumkile mondi (@lmondi) September 13, 2019
Mboweni also took a hard line on some of the embattled state-owned entities.
SA Express, which has been grounded twice this year amid massive financial problems, received a R1.2bn bailout in February, and will get another allocation from R300m, the airline confirmed this week. A proposal for the consolidation of SAA, Mango and SA Express will be submitted to Cabinet next week
Tito Mboweni on SA Express bailout: "my natural answer is shut it down"— Nick Hedley (@nickhedley) September 13, 2019
Mboweni also wanted Eskom's financial services unit "out".
Established in 1990, Eskom Finance primarily focused on providing home loans to staff. It now has an R8.7bn loan book and about 16 000 "customers". Bloomberg reported last year that government was preparing to sell it.
"I have decided I am not a minister of bailouts. I am not a minister of compensation of employees in the public service, and I'm not the minister of debt management service office. I'm a minister of finance.' But they would say, 'you are minister of finance really. A huge chunk of your contingent liabilities is about bailing out SOEs, you are signing cheques on the compensation of employees, your allocations for infrastructure investment and growth is low. So that's what you're, the minister of bailouts'," the Sowetan quoted Mboweni as saying at the event.