Budget still projects deficits up to 3.5 times that of Zuma era; Sakeliga report gives 30/100 for policy reform - Sakeliga-ETM economic update (quarter 1, 2021)
24 February 2021
“The alarming bottom-line of Mr. Tito Mboweni’s 2021 budget is that its projected deficits range between 2 and 3.5 times compared to those of the final days of the Zuma era. From the point of fiscal and economic sustainability, Mr. Mboweni’s latest budget is therefore at least twice as concerning as those of former Minister of Finance Malusi Gigaba. The increase in expenditure and debt must, however, not be laid at the feet of Mr. Mboweni, but at those of government for its failure to implement the required structural and policy reform,” says Piet le Roux, CEO of business group Sakeliga.
Two weeks ago, Sakeliga called for a move toward a balanced budget and emphasised that large-scale structural reforms are necessary to undo the damage done by restrictions.
“Unfortunately, on numerous occasions, government and public officials have demonstrated a readiness to unilaterally impose severe restrictions on large sectors of the economy. Until clarity and assurances on the manner of future restrictions is evident from Pretoria, businesses should position defensively for blunt interventions.
While in the medium-term businesses should exercise caution over the potential for renewed Covid-related regulatory harm, the real economic problem in South Africa is unsuitable long-term economic policy from government. These include more stringent political capital allocation programmes such as BEE, Expropriation Without Compensation (EWC) and the general expansion of state control over the economy. Businesses takings steps to guard against exposure to these risks would be acting in the public interest,” says Le Roux.