Finance Minister Delivers Weak Budget Statement
24 October 2018
Today’s medium term budget statement presented by Finance Minister, Tito Mboweni in parliament was a missed opportunity to address the challenges our economy faces - it was weak, lacked substantive measures on debt servicing costs and he presented nothing new on improving State Owned Entities (SOEs) and strengthening accountability measures across the board.
On the implementation of the President’s Stimulus Package, the Minister failed to provide substantive details and very little focus was placed on the National Development Plan, thus, this recovery plan exists in a complete vacuum.
We further note the following with serious concern:
There is no contingency reserves - funds have all been used up – Should our country face a major disaster – or any emergency - we will not be able to fund relief efforts or meet demands thereof;
SOEs helped through bailouts and not through proper management and no consequences:
- ESKOM – R350 billion government guarantee facility – R255 billion used – R35 billion has been approved for specific funding instruments;
- DENEL – 5 years of government guarantees to the amount of R3.4 billion – R2.8 billion have already been used – they will now struggle to settle maturing debt;
- SAA – R19.1 billion guarantees – R 14.5 billion has already been used and now SAA requires an additional R5 billion from tax payers funds.
- SANRAL – R38.9 billion in government guarantees - an additional R5.8 billion allocated to SANRAL in 2018/19 financial year.
- RAF – RAFs operational deficit in 2017/18 declined to R26 billion from R35 billion in 2016/17 – despite 30c increase to RAF levy in the 2018 budget – The funds’ liability is expected to grow to R393 billion by 2020/21 from R206 billion at present (2018) - RAF to require further increases to the fuel levy in each of the next three years to manage short term liability.
Furthermore, the Minister failed to elaborate on the expanded list of Zero Rated - VAT free items – which have not been prioritized – thus the cost of living remains exponentially high in comparison to household income. We welcome the tax free sanitary towel announcement.
It is indeed a sad day for South Africa; particularly for the poor, the unemployed and the vulnerable as the Minister did not mention any form of immediate relief.
Issued by Mkhuleko Hlengwa, IFP National Spokesperson, 24 October 2018
