Opposition parties underwhelmed, but ANC welcomes Tito Mboweni's budget

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Finance Minister Tito Mboweni delivered the medium-term budget policy statement on Wednesday.
Finance Minister Tito Mboweni delivered the medium-term budget policy statement on Wednesday.
PHOTO: GCIS
  • The DA, EFF, IFP and FF Plus were not impressed with Finance Minister Tito Mboweni's MTBPS.
  • The ANC "appreciates the difficult choices faced by government" and "supports government's responsible interventions to manage the national debt".
  • The DA, IFP and FF Plus are concerned about the SAA bailout, but the ANC welcomed it and the EFF said SAA should not be sold.

While opposition parties took a dim view to the Medium Term Budget Policy Statement (MTBPS) Finance Minister Tito Mboweni tabled on Wednesday – particularly with regards to the SAA bailout and national debt – the ANC welcomed it.

According to a statement from the office of ANC chief whip Pemmy Majodina, the ANC caucus was "acutely aware that the minister has tabled the MTBPS within a severely constrained fiscal space".

"This year's MTBPS is also delivered amid the global coronavirus pandemic that has had a devastating impact on the global economy," the statement read.

"The ANC caucus appreciates the difficult choices faced by government in responding to this unprecedented crisis. The ANC supports government's responsible interventions to manage the national debt and prevent South Africa from falling into a deeper debt trap."

The ANC caucus welcomed the decision that the government had "not imposed full-blown austerity measures that could cripple the prospects of recovery".

On SAA, the ANC said:

We also support the Government’s decision on the continued operation of SAA and the endeavours to fund the revival of SAA and not its liquidation, which is based on the fact that SAA is an agency of value added economic activity for the country. A restructured SAA operating efficiently and on commercial principles will also positively contribute to the economic recovery of the country.

DA MP and spokesperson on finance Geordin Hill-Lewis was not as enthusiastic about the R10.5 billion bailout for SAA.

"The granting of another R10.5 billion bailout to SAA, on top of R16.4 billion allocated in February's main budget, shows the ANC's disregard for poor South Africans," he said in a statement.

"Minister Mboweni should have held the line and refused this bailout.

"He has made this an issue of principle in the past, and has repeatedly committed that no more public money would be wasted on SAA. But he has now capitulated, has broken that promise, and must now reconsider his position in Cabinet."

He said the DA would continue to mobilise against this bailout, and called on the public to take part in the budget process to make their voices heard in opposition.

'Zombie state company'

Hill-Lewis is also concerned about the debt scenario.

He said: 

The targets he committed to in July he has now retreated from. Debt will not stabilise in 2023, and will not stabilise at 87% of GDP. Instead, debt is now only targeted to stabilise in 2025/26, and then only after ballooning to 95% of GDP. That means an extra R1 trillion in new debt.

He said South Africa would now spend 21 cents in every rand of tax revenue on paying interest, and will spend more on interest costs [R271 billion], than on police [R104.7 billion] and healthcare [R231.3 billion].

"And because of the ballooning debt, interest costs will even overtake social grants in 2023.

"South Africans will continue to pay for a zombie state company, and will continue to suffer the consequences of ever-higher debt.

"That is why today's Medium Term Budget Speech must be considered a failure."

Underwhelmed

The EFF was also underwhelmed and described the MTBPS as predictable in a statement.

Its statement read:

The policy statement presented by the finance minister, inundated by rightwing ideological drivel disguised as sense and reason, is evident that Tito Mboweni is part of the cabal that is serving local and foreign white monopoly capital [sic].

"South Africa's huge debt to GDP, budget deficits and high-interest expenditure is as a result of the governing party's mismanagement of the economy."

The party said Mboweni did not provide a "believable plan" on how to address the out of control debt.

"SAA must not be sold to anyone because the bidders will be foreign companies which will not care about the strategic importance of a national airline. Those who assess the importance of SAA just on superficial balance sheets are shortsighted."

IFP MP and spokesperson on finance, Mzamo Buthelezi, said the policy statement "speaks directly to the consequences of poor financial and economic management".

Debt trap 'will compromise our sovereignty'

"Our country would not find itself knee-deep in debt, with a debt to GDP ratio of 81.8%, if we had adequately prepared during the past few years, sans the difficulties of Covid-19," he added in a statement.

He said: 

The alarming rate at which our country is borrowing to service debt costs means that we run the risk of a debt trap, which will compromise our sovereignty as a state as we would be willing to sell off our country to the highest bidder.

Buthelezi said the continued bailouts of SAA and other failing state-owned enterprises should stop.

"We cannot continue to throw money at non-financial restructuring plans.

"We must focus our attention on the agricultural sector – as it is already growing, and we as the IFP have been calling for greater emphasis to be placed on this sector."

FF Plus leader Pieter Groenewald said in a statement it was clear that Mboweni and the government were placing themselves in a checkmate position.

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