Note to editors: The following is a reaction statement by Dr Dion George MP, to the Medium Term Budget Speech.
The Minister of Finance’s annual Medium-Term Budget Policy Statement (MTBPS) is another indication that Government has no effective plan to accelerate economic growth, resolve relentless blackouts, stabilise debt, reign in runaway expenditure, support vulnerable South Africans and combat corruption.
Though the hour is late, the DA notes the Minister’s announcement of Government’s plan to accelerate private-public partnerships to rebuild South Africa’s crumbling infrastructure. The DA supports this initiative and has already made proposals to implement this model.
This is where the good news ends.
Although Government claims to be making significant progress on resolving relentless blackouts, the lights remain off, and Government commitment to unbundling Eskom is not moving fast enough while the entity continues to generate enormous losses.
Tepid economic growth is projected to continue with the result that revenue projections remain overstated, and Government was therefore forced to cut expenditure on service delivery and social spending in the absence of any bold initiatives. This means that Department budgets will need to be cut further if Government wants to avoid running out of money.
As a consequence of slow economic growth and the irresponsible takeover of state-owned enterprises’ (SOEs) and Municipal Debt to Eskom, the Minister had no alternative but to increase borrowing, and has delayed debt stabilisation yet again.
The Minister has eluded to introducing a fiscal anchor as a mechanism to achieve consolidation. The DA has already introduced a Responsible Spending Bill that seeks to achieve this exact outcome.
We further note with concern that Treasury is working with the Department of Public Enterprises and Transnet to either offload the entity’s debt on the sovereign balance sheet or bail it out. This situation is not dissimilar to Eskom, reflecting an inability to repay its debt and the need to borrow more to remain barely operational. A better solution would be to accelerate Transnet’s privatisation.
Despite the President’s commitment in his 2023 SONA to restructure the size of the State, this is not reflected in the numbers. The public sector wage bill continues to balloon unsustainably.
This MTBPS was confirmation that Government simply does not care about the plight of battling South African households who are unable to put enough food on their tables. There was no mention of the so-called food security plan of action to protect consumers from the burden of skyrocketing food prices. The Minister could very easily have expanded the zero-VAT rated basket of food to bring immediate relief to South African households. He could also have reduced the taxes and levies on fuel which would have provided further relief.
We note the extension of the Social Relief of Distress (SRD) grant for another year in the absence of any policy decision or funding solution over the medium term.
We are disappointed at Government’s clear disinterest in having South Africa removed from the FATF greylist as fast as possible. There is no reason why Government cannot accelerate this process. This would begin with the allocation of additional funds to the National Prosecuting Authority (NPA), Special Investigative Unit (SIU), and Financial Intelligence Centre (FIC). We note that there is no substantial increase to corruption-fighting institutions as promised.
This MTBPS speech does not offer bold action and fails to address the urgent economic crisis facing South Africa. The DA’s alternative set out what is possible if the Minister was in fact bold, but he certainly was not, and missed an opportunity to set us on the path to a sustainable economic recovery.
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