Fight back, or be a lame duck, Tito!

20 September 2020

Finance Minister Tito Mboweni has accepted defeat in the battle to stop any further bailout of SAA. The confirmation by Pravin Gordhan that SAA will be bailed out again represents a crushing defeat for Mboweni’s long running fight to stop any further public bailouts of the airline. Mboweni further confirmed, in a reply to me on social media, that one should expect “you will lose many battles along the way”.

Mboweni should not accept defeat so meekly. The Democratic Alliance calls on him to fight back against this bailout decision and do what is right for the country, not what is right for his party. He should fight back. He should dig in his heels and refuse to fund this bailout. South Africa needs a Finance Minister who will stand firm against political pressure and hold the line. If he does not, he will be a lame duck Finance Minister who is no longer in control of government spending.

This battle is not just about SAA. It is about the principle that public money should not be poured endlessly into failing state-owned companies, when other truly essential public services on which the poor depend are so underfunded. It is also about the credibility of the government’s commitment to fiscal discipline and economic reform.

This is a critical moment for Mboweni, who has drawn a line in the sand on this issue, repeatedly saying that government should not and would not bail out SAA again. If he accepts defeat, then he will have to carefully consider his continued future in the government. That Gordhan made the announcement, and not Mboweni, is a pointed insult to the Finance Minister by his own Cabinet colleague. If he can’t win ‘no brainer’ fights like this, then he will never succeed in getting public spending under control, and there is little point in staying in the government.

This also undermines the credibility of President Ramaphosa’s commitment to real economic reform. The government’s reform agenda is centred on reducing debt and restoring fiscal discipline. That is incompatible with bailing out SAA, unless the bailout is funded by deep cuts to basic services for the public. The President and Minister Mboweni will have to explain and defend these cuts.

With less than a month left before the Medium Term Budget Policy Statement, it will be impossible for Mboweni to speak about public expenditure reduction when it is clear that he no longer has the full support of President Cyril Ramaphosa and the Cabinet to achieve this objective.

South Africa can ill afford to have a lame duck Finance Minister who has ceded control of Treasury and is unable to lead the country on a path of economic reform.

Issued by Geordin Hill-Lewis, DA Shadow Minister of Finance, 20 September 2020