Spending will have to be curtailed and the fiscus desperately needs everyone who can to pay for their municipal services, water and electricity if we want to survive, writes Adriaan Basson.
There is a line in Finance Minister Tito Mboweni's brutally honest 2019 Budget Speech that I can't get out of my head.
"We are borrowing R1.2bn a day."
Read that again. Let it sink in. If you ever doubted that South Africa's economy was in deep, deep trouble, doubt no more.
Some perspective: R1.2bn is the value of Bosasa's biggest two tenders, combined, that we borrow per day. Or: with R1.2bn, you can build about 8 000 low-cost houses. And that is what we borrow per day.
We are borrowing just to keep the lights on, to service our debt and to keep the state ticking.
Any Grade 10 learner with a basic grasp of mathematics will tell you that we are doomed to fail if we keep on spending more than what we earn. It's literally that simple.
Mboweni had the tough job of breaking this news to South Africans. He didn't mince his words and his ANC colleagues sat stone-faced as he punted selling off non-strategic state-owned enterprises, reducing the size of the civil service and reducing the staff at hundreds of our embassies around the world.
Remember, the ANC has an election to fight in less than three months and losing the support of the trade unions at this point must be giving the Luthuli House loyalists sleepless nights.
At some point during his speech, only DA MPs clapped as the tough-talking Mboweni laid down the law on fiscal discipline. #Awks.
Whatever you may think of Mboweni, his straight-talking, no-nonsense approach was refreshing and exactly the medicine South Africa needed at this juncture. The alternative is too ghastly to contemplate – handing over the keys to Treasury to the International Monetary Fund and other Washington-based institutions is like handing over your bank account to your banker to manage.
You lose control over fiscal decisions and are no longer the master of your own destiny.
How did we get here? I'm no economist, but there are probably three main reasons: a bloated civil service, corruption and inheriting a state that was engineered to look only after a minority.
The civil service was dramatically upsized during Jacob Zuma's tenure as president with higher than inflation increases. The idea of the state employing as many people as possible is a noble one, until you can no longer afford to pay their salaries.
Studies have shown that Eskom can be run efficiently with less than half of its current staff. The SABC's Fawlty Towers in Auckland Park are filled with paper pushers and SAA has been running at losses for many years.
These institutions will simply have to be downsized to decrease our dependence on loans to survive.
President Cyril Ramaphosa has made his intentions clear that he plans on downsizing ministries and government departments, but this will realistically only happen after the election. There is no nice way to say this: people will lose their jobs.
It will pit Ramaphosa against his own party and the ANC's alliance partners and could determine his political fate in a post-May South Africa. Look at the failed attempts of the previous SABC board to cut down the staff complement of our public broadcaster; the Luthuli House opposition was too strong.
Ramaphosa will be isolated and weakened if he cannot convince his comrades on the need for restructuring the civil service. Like with the SABC, his Cabinet colleagues and the ANC will kick back and undermine his efforts to get our spending in line with our income.
Mboweni made it clear towards the end of his speech that Ramaphosa was deeply involved in crafting the detail of the Budget. Even though the ANC is too scared to campaign on this, I have no doubt that the civil service will be cut after Ramaphosa has been elected president on 8 May.
The true cost of corruption to the state is yet to be determined, but it surely runs into many billions. The establishment of a special tribunal by Ramaphosa on Sunday to embolden the Special Investigating Unit to recover stolen monies for the state must be applauded.
Jailing corrupt politicians and businessmen is pivotal but getting back the loot is just as important.
The ANC inherited a deeply troubled economy in 1994 and had to spend billions on infrastructure and social services to achieve higher equality between black and white people. For this, the party cannot be blamed.
But spending will have to be curtailed and the fiscus desperately needs everyone who can to pay for their municipal services, water and electricity if we want to survive.
Mboweni's tough love was at times deeply uncomfortable to hear, but exactly what the doctor ordered.
- Basson is editor-in-chief of News24.