Like his predecessors, it seems that that the new Minister of Finance, Enoch Godongwana, is not blind to the country’s budgetary challenges and he has, therefore, proposed possible solutions.
Unfortunately, until now no words have prompted government to take action. As long as the ANC government keeps clinging to its current policy directions, there will be no improvement in the country’s dire fiscal situation.
In the Medium-Term Budget Policy Statement (MTBPS) that Minister Godongwana tabled on 11 November 2021, he recognised the need for economic growth and investment certainty.
These are not only hampered by policy uncertainty, but also by restrictive policy and legislation that deter investors and are detrimental to economic growth. Corruption and infrastructure decay are also exacerbating the problem.
Government debt is out of control and currently amounts to a staggering R4,314 trillion.
The financing costs related to this debt total R269 billion, which means that 21 cents out of every rand is used to service the debt. These costs are expected to rise to R365,8 billion by 2024/25.
Future prospects also seem bleak as it is projected that by 2025/26, government debt will comprise an estimated 78% of the country’s GDP.
And at present, the government’s wage bill is still growing much faster than the country’s GDP.
Public enterprises are placing an ever-increasing and unsustainable burden on the fiscus. July’s unrest and associated looting exhausted SASRIA and an unprojected R11 billion has now been allocated to this enterprise.
The liabilities of the Road Accident Fund (RAF) amount to R450 billion.
Failing public enterprises can no longer be buoyed up and must be privatised.
The Minister also made mention of structural economic reform, but no concrete plan for addressing the country’s energy crisis and Eskom’s apparent collapse was tabled. In that regard, privatisation is also the only solution to the problem.
To sustainably improve South Africa’s fiscal position, expenditure must be drastically reduced. The Adjustment Budget, however, does not aim to cut back on expenditure and instead puts forward misguided priorities that further hamper economic growth.
There are too many needless expenses and misguided priorities. A total of 27 million South Africans are now mainly dependent on social grants for survival.
That is nearly 10 million more people than two years ago – it is absolutely unsustainable without economic growth and job creation.
The single ray of hope, i.e. the slight economic growth experienced in 2021, is primarily the result of rising commodity prices and not job creation.
It demonstrates that the government still has not created a favourable environment for the private sector to enable it to create more jobs. Ultimately, all plans are doomed to fail under the ANC and its destructive policy.
Read the original article in Afrikaans by Wouter Wessels on FF Plus