Only time will tell whether Mboweni promises are also empty
25 October 2018
The new Minister of Finance, Mr Tito Mboweni, does indeed identify the real reasons behind the country's economic stagnation, but only time will tell whether he will or can take decisive action to do something about it.
The Minister's biggest problem is that his own political party lacks the political will to take decisive action to cut unnecessary expenditure, reduce the government's payroll and in so doing ensure policy certainty.
The Minister even quoted from the Bible (Isaiah 58:12) where it says that the ancient ruins will be rebuilt.
That is an admission that the ANC has torn South Africa down and now all that is left of our country is a ruin. The Minister also failed to mention exactly how the country's economy is going to be rebuilt.
There will be no economic growth if the ANC government continues on its policy path of expropriation without compensation.
The Minister's pinpointing of some of the problem areas is, however, positive and creates the impression that he knows what is amiss. An example is our government institutions, like the SAA. The Minister said that these entities must undergo change and that their management must be put under a microscope.
And yet he is willing to bail out the airline for the umpteenth time with another R5 billion. In total, the government has thrown R9,1 billion into the bottomless pit of failing state-owned entities in an attempt to help them overcome their financial problems.
Public officials' payroll was also identified as a problem. The Minister indicated that after the newly accepted salary increases for public officials, there will be a deficit of R30,2 billion over the medium term that will have to be funded.
The salary increases were not budgeted for, which means that departments will have to use their service delivery budgets to cover these extra expenses if they do not retrench employees. That will have a negative impact on service delivery. It raises the question of whether it is fair to punish the public if mismanagement lies at the root of the problem.
The FF Plus considers interest on government debt to be a serious problem on the road to economic recovery. At present, the interest amounts to R162 billion per year. Seeing as the collection of revenue has decreased while expenses and needs have increased, the government will have to make more debt.
The interest on government debt is expected to increase to R221 billion in 2021. That means that tax payers can expect increases in personal tax as from next year February.
Furthermore, the Minister promised to take strict action against corrupt officials. The president has also promised the same thing and the Zondo Commission confirms it. However, thus far not one person has been arrested or criminally prosecuted for corruption.
Another positive is that the Minister emphasised the independence of the South African Reserve Bank.
The right problems have been identified. Now decisive action must be taken if the Minister is serious about saving our country's economy. It is, however, clear that the ANC government is incapable of bringing about positive economic change and that is why South Africa needs a multiparty government with the FF Plus as a partner.
Issued by Pieter Groenewald, FF Plus leader, 25 October 2018
