STOCK TAKE | In praise of SA's great worriers

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Serious number crunching

Mboweni's legacy

The main lesson from the recent UK budget disaster: the market doesn't buy unearned positive spin, especially not from politicians. With that in mind, let's give thanks that Tito Mboweni doesn’t have a sunny disposition.

Two years ago, amid the economic wreckage of the pandemic, Mboweni did not try to accentuate the positive about South Africa's fiscal position. He was alarmingly downbeat in his public statements, warning that under a best-case scenario, where the state adopted fiscal consolidation, gross government debt would blow out to 86% of GDP by this year (worse-case: 97%).

He was wrong. 

Treasury now expects government debt to stabilise at 71.4% this year, according to this week's medium-term budget. 

Miraculously, this is almost exactly what Mboweni's Treasury predicted in the good old days of three years ago, when it forecast that debt would rise to 71.3% this year. This was long before the pandemic's economic devastation, so it's quite the achievement that South Africa still managed to keep its government debt in line with the 2019 prediction.

A boom in commodity prices, which delivered a corporate tax bonanza, helped. But Mboweni deserves recognition for his grim insistence that the state coffers were empty, and his unwillingness to yield to magical thinking. It was no use to come begging for more government money. He was steadfast in his refusal to give in to pressure and land South Africa in a debt spiral. Eventually, his can't-do attitude probably cost him his job. 

Treasury has earned market respect for under-promising and over-delivering. While this week's Budget disappointed by not giving more details about the Eskom debt transfer, it – again – delivered enough positive surprises to keep investors happy. 

Thankfully, Mboweni's successor Enoch Godongwana is no sweet-talking Pollyanna either, and neither is the rest of South Africa's fiscal front bench - Reserve Bank governor Lesetja Kganyago, SARS commissioner Edward Kieswetter and Treasury acting DG Ismail Momoniat. Together, they would form a particularly bad comedy line-up, as was evidenced by a rather dour collective appearance at a pre-Budget media briefing this week.

But while the worst of the debt crunch may be over, these are serious times, which require serious leaders.

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R62 billion

The amount by which investment in SA remains below pre-pandemic level, despite gross fixed-capital formation rising 3.7% in the first half of 2022, according to the Treasury. Private investment, the largest component of gross fixed-capital formation, accounted for 87.4% of the shortfall.

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