Sometimes, upon reflection and with the passage of time, an event that one originally considered to be disappointing becomes more tolerable.
Wednesday's Medium Term Budget Policy Statement (MTBPS) was unfortunately, not one of those events.
For Finance Minister Tito Mboweni, there was no hiding the stark statistical reality. A massive increase in the budget deficit from 4.3% of gross domestic product (GDP) to 6.2% just since February; the national debt at R3trn rising to as much as R4.5trn over the next three years; debt to GDP on a break-neck march to over 70%; tax collections down by some R53bn and yet another downwards revision of broader GDP growth to an almost stagnant 0.5%.
It was, in essence, nightmare stuff.
For all the talk, analysis and promise of turnaround, there was precious little that the Minister could report as any success achieved since the main Budget in February. If anything, his dismal report-card has simply extended the pain felt by many South Africans as precious few new policy interventions seem likely – at least in the short-term.
By now, it has become clear that the political dynamics within the ANC are preventing meaningful reform. Coming out of a destructive decade of market-unfriendly internal party dynamics, the ANC still cannot resolve the now urgent need to compromise on its own ideological purity and remove the straight-jacket that is not-so-slowly anymore squeezing the country towards a fiscal cliff and possible financial ruin.
The broader MTBPS really exemplifies the stultifying political impasse that emanates from the ruling party. Damned if they reform (from their Unions and leftist base) and damned if they don’t (as the coffers run dry). That’s where the ANC stands currently And South Africa too.
In seeking a way out of the quagmire, there are no easy options. For the moment, as President Ramaphosa still gingerly finds his political feet, the emphasis has been on an institutional clean-up. Nothing wrong with that. You have to start somewhere and there is much broader political buy-in to recreating a capable state than there is to economic policy change.
But, while there has been substantial progress in instilling a new governance and ethical ethos at the SOE's, the inability to exact similar change in economic policy making is now apparent in the stagnation and deterioration of the economy.
The MTBPS showed us clearly that there was little progress on the key contested issues of greater privatisation of the SOE's as well as lowering the public sector wage bill. All Minister Mobweni could do was once again kick-the-can-down-the-road to an undetermined further date on said issues. And, time will pass, more debt will mount and more delay in delivery will occur.
So, amidst the sorry state of the presentation yesterday, can we discern anything positive about the way forward? Well, without clutching at straws, there was some indication of the frustration being felt by Mboweni – and it’s pretty good when the key minister feels uncomfortable. After all, Jacob Zuma never did as he dismissed ‘State Capture’ repeatedly.
Mboweni clearly represents a different type of ANC insider. Less wedded to narrow ideological labels, he reminds one of a South African version of the former Chinese leader, Deng Xiaoping who was prepared -albeit within the parameters of a deeply autocratic political order – to reconsider the historic prescripts of communist and socialist ideology.
Famously, in talking about the need to modernise his own parties’ economic philosophy, Deng said “It doesn't matter whether a cat is white or black, as long as it catches mice”. This is a clear reference to putting labels aside and going head-first for results. Indeed, whilst few in South Africa would idolise the state control practiced by Beijing; many would praise the shift in that country away from debilitating rigid dogmas to an injection of solid private enterprise into the statist model.
Indeed, Mboweni singled out China in his speech for being 7 times richer today than 25 years ago. He was at pains to point out that South Africa was only 1.3 times better off over the same period. All of this China referencing (as also done the day prior by Public Enterprise Minister Pravin Gordhan) has a deeper role within the ANC’s party formations.
And it was precisely the narrative – not the policy – that was the better take-home from the MTBPS. Mboweni was still trying to convince his own party of their urgent need to recognise the state were in – and consider changing their way of thinking. The speech was more a rallying cry to his own benches in full view of the global audience.
His sense of urgency was hardly directed at the business community and broader South African civil society that have been clamouring for more rapid policy shifts. He needed to preach to the unconverted – of which most remain inside his own party with many of those sitting in the very benches he occupies.
For Mboweni, one could argue that this message should be put in caucus and at the various ANC decision-making bodies. And perhaps it has, but also perhaps to no avail. By taking the message more public, Mboweni has expressed his unease with how his own party has been so stubborn in refusing to be more pragmatic. And, it was a type of ‘riot-act’ that he read too – that a debt trap was staring the country in the face with all the deeply damaging consequences thereof.
Ultimately therefore, without any meat on the bones of policy shifts, the Minister had the right message. But the question has to be asked just how long this impasse between party and policy can endure? The MTBPS showed just how damaging it is in every statistic revealed.
At some point, the checkmate between competing and contesting political factions within the ANC will either cause the party to combust – or the South African economy.
On the basis of the MTBPS, the economy seems more in danger after yesterday.
* Daniel Silke is a political analyst, author and keynote speaker. Views expressed are his own.