'Game over': Mboweni's frustrated tweets show he is losing patience, say economists

As the man in charge of the country's ailing economy, Finance Minister Tito Mboweni appears to be losing patience with the slow pace of economic reforms he has been pushing since he took office in 2018.

Following a World Bank report putting South Africa's growth forecast at a measly 0.9% for 2020, Mboweni took to social media to sound his most hard-hitting warning about the future that awaits the country if it fails to urgently implement reform.

In series of Tweets early on Friday morning, the minister spoke of the "dire consequences" of not effecting "deep structural economic reforms" - saying if that did not occur, it would be "game over" for South Africa and that the country would find itself downgraded to junk status. 

Economists have suggested Mboweni's message lays the groundwork ahead of the National Budget in February, where he is expected to address lingering concerns over the country's financial position.

More talk

"I think he is frustrated that the February budget is around the corner and we have not seen enough action to address some of the concerns raised in the October budget," said Maarten Ackerman, Chief Economist at Citadel.

"He is frustrated that February budget will just be another talk about policy plan." 

Since his appointment as Finance Minister in October 2018, following the resignation of Nhlanhla Nene, Mboweni has taken a tough stance against wasteful public expenditure, including the bulging wage bill - which accounts for 35% of government spend - and called for reducing the financial dependence of cash-bleeding public entities on the state.

In September last year, he warned his comrades during the ANC National Executive Committee meeting, that public entities posed a “massive risk to economic stability and fiscal sustainability”, with Eskom’s total debt balance amounting to some 9% of the country's GDP.

"His frustration is based on the fact that there should have been more traction by now, but little has happened," said Ackerman.

In August last year, National Treasury released an economic policy document, which outlined a number of reforms aimed at raising average economic growth in South Africa by 2.3 percentage points over ten years and creating one million job opportunities. Some of the proposals included increased support for exports, agriculture and tourism.

The document received mixed reviews, including criticism from some labour unions, who described it as incoherent and unreliable.

Business concerned

Ackerman added that the business sector has also been concerned by the pace of reforms, adding that there have, however, been positive developments: the decision to place South African Airways under business rescue, as well as the scrapping of birth certificate regulations for parents travelling with children.

At the time of the mini budget in October, Treasury revised the country's growth outlook for 2019 to 0.5%, down from 1.5%, in a speech that focused on the urgent need to cut excess and turn around the economy. The cut came after Moody's downgraded the forecast for 2019 from 1% in June to 0.7%. The agency also raised cited the slow implementation of reforms  as a major hindrance.

The World Bank recently cut its forecast for SA's growth in 2020 to below 1%, against National Treasury’s last projection that SA's economy would grow by of 1.2% in 2020, or Moody's, which expected 1%.

In the view of Peter Attard Montalto, head of capital markets research at Intellidex, Mboweni is rightly calling out the snail's pace of reform.

"Reforms are happening but far too slowly to offset load shedding risk and boost sentiment."

Another economist, Azar Jammine, pointed at political infighting within the ANC as one of the factors hindering effective policy.

"There is a fight within the ANC in terms of what economic solutions are being sought by the organisation, the ultimate casualty in that fight is the economy," said Jammine, Chief Economist of Econometrix.

He also said the timing of the tweets could also be meant as a message to the ANC, to coincide with its 108 year anniversary celebrations in January.

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