A Budget from a Broken Government

26 October 2022

Click here for the DA's live reaction to the Medium Term Budget Speech.

No relief from the rising costs of living. No prospects of economic growth. More debt and more bailouts.

In today’s midterm policy statement, we expected the minister to announce policy interventions that would have resulted in economic growth and desperately needed jobs, and alleviate the plight of the most vulnerable South Africans.

To do this he needed to signal a policy direction that would enable the private sector, in particular SMMEs, to do business more easily in our economy. Instead, he reinforced the proven failed developmental state model that places a dysfunctional state at the centre of our economy through more bailouts to SOEs and accelerated government expenditure.

Another R 30 billion in bailouts to Transnet, SANRAL, and Denel that crowds out spending in the economy that would have been better utilized to direct the path to desperately needed growth and consequently job creation.

Earlier this year Treasury has committed itself through setting fiscal targets to reduce debt levels over the MTEF given that the rising costs of interest has become the largest expenditure item, which crowded out the prospects of a post-pandemic economic recovery.

Instead of reducing this debt burden on hard working South Africans, the transfer of a large portion of Eskom’s very significant debt liabilities (between R 126 billion and R 260 billion) to the national balance sheet will result in a significant increase in the debt-to-gdp ratio and a continuous upward spiral in interest repayments that will crowd out more service delivery to the poorest South Africans.

The greatest failing of this policy statement is its silence on how government will address the plight of the vulnerable as they battle to survive the relentlessly upward spiralling cost of living. The minister is silent on how the most vulnerable South Africans will be supported other than the extension of the social relief of distress, which the DA does support.

Instead of extending bailouts the minister could easily have announced an expansion of the zero-rated food basket as proposed by the DA that would have brought immediate relief to the ever-growing hunger crisis that the majority of South African households are facing.

The minister was also silent on tackling transportation costs that drive up the price of food; this he could have done by announcing action on fuel levies and transportation taxes. The minister was further silent on the R50 million transfer to Cuba that could have been redirected immediately to the poorest households.

Although we welcome the minister’s commitment to increase the budget of the NPA in response to the DA’s call to do everything possible to avoid a greylisting in February 2023, this budget is a clear reflection that government has run out of money and out of ideas.

It is a budget from a failed government that doesn’t care about the plight of distressed South Africans.

Issued by Dion George, DA Shadow Minister of Finance, 26 October 2022