Budget2024: Uninspired continuation of spending priorities by an uncaring government
21 February 2024
The budget presented by Finance Minister Enoch Godongwana today is uninspiring and continues with the misguided spending priorities of the uncaring ruling party. This is the budget of a ruling party which has run out of options after decades of mismanagement and dismal economic growth. As a result of their failed governance, South Africa is now unable to direct resources to the priorities that we so desperately need to address.
This is another missed opportunity that shows the ruling party lacks the political will to cut funding from non-strategic programs, such as the R3.7 billion VIP protection budget.
We cannot afford ‘more of the same.’ South Africa’s economy needs urgent, innovative interventions to get us back on track. Real GDP growth is expected to come in at 0.6% for 2023, entirely insufficient to grow the economy, the tax base, and to create jobs. The budget deficit is growing despite repeated broken promises that it would decline, and debt servicing costs are expected to consume more than 20% of available funds.
Against this backdrop, it is unsurprising that the budget offers struggling consumers little relief from rising inflation, while failing to make any significant additional allocations to strategic priorities, including infrastructure development and education. Meanwhile, the meagre increase in social grants will do nothing to alleviate the suffering of those trapped in poverty amid the ruling party’s economic policy failures.
It is deeply concerning that at a time of budgetary cuts along frontline services, the ruling party has decided to allocate an additional R200 million towards political party funding of which it will receive the largest share. This is again a tell-tale sign of the ruling party making use of state resources to benefit itself and its supporters in order to retain an electoral majority in the upcoming elections.
Moreover, the Minister announced intention to reallocate R150 billion from the Gold and Foreign Exchange Contingency Reserve Account, held by the Reserve Bank, to service debt. The fact that we are spending such a massive amount of money on servicing debt incurred for consumption spending, rather than for incremental new investment that would stimulate economic growth, is truly an indictment of the failures of the ruling party’s time in government.
However, we note with caution the stated attempts to improve the infrastructure investment climate in South Africa. ActionSA has long promoted the reform of Public-Private Partnership (PPP) regulations to ensure that private-sector investors can participate in addressing the nation’s critical infrastructure shortages. The speech is low on detail, so we will continue to monitor the situation.
We also note discrepancies between the Budget Speech and the ruling party’s other policy goals, including the Integrated Resource Plan and so-called attempts at addressing corruption. The proposed allocation of R628 million to the Department of Justice and Constitutional Development is wholly insufficient to make any progress on implementing state capture and the Financial Action Task Force (FATF) recommendations, considering the economic costs of corruption and greylisting. However, it is a very accurate illustration of the ruling party’s desire to protect its patronage network.
As a party that values economic prosperity, ActionSA has a plan to turn around the decay of South Africa’s economy and the continued job losses which have taken place under the ruling party. An ActionSA government would take a zero-based budgeting approach, consolidate departments and immediately end the unsustainable bailouts of state-owned enterprises to save money. Liberalising the labour and electricity market will also unlock billions in private sector investment which would further spur economic growth and job creation.
Minister Godongwana’s budget highlights the urgent need to remove the ruling from the government to reintroduce good fiscal spending and implement innovative measures to reignite economic growth and create millions of new jobs. Unless South Africa is able to quickly grow the economy and create jobs, we will be stuck in a low-growth environment which will further contribute to the decline of the country’s socio-political situation.
It is clear that the only solution is for South Africans need to take action in the upcoming election and remove the ruling party from power. We simply cannot afford another five years of rising inflation, rising unemployment and a debt spiral.
Issued by Herman Mashaba, President, ActionSA, 21 February 2024
