South Africa still finds itself in a serious economic crisis. The damage of decades under ANC rule and misguided policy directions cannot be undone overnight. There are, however, a few rays of hope breaking through the dark cloud.
Based on today’s Medium-Term Budget Policy Statement by the Minister of Finance, Mr Enoch Godongwana, it appears that the blind optimism and vague promises of the past have made way for a more pragmatic perspective on the country’s economic and fiscal problems, and the focus has shifted to the private sector which ought to be nurtured to save the economy.
It also appears that the Government of National Unity (GNU) has sparked hope that positive changes are indeed possible. Minister Godongwana aptly described it as a “fresh sense of hope, energy and fellowship”.
The harsh reality is that government’s debt levels remain unsustainably high and that it will have to lend even more. The budget deficit is growing and for every rand of tax collected by government in the current financial year, 22 cents is used to service its debt.
By 2025, the country’s debt will amount to approximately R6 trillion (6 thousand billion).
Tax collection is also less than expected due to poor economic growth.
One positive aspect is that the Minister realises prioritisation is needed to establish a viable and stable fiscal framework to bring about growth. And that structural reforms are needed to achieve this.
In the past, government set out what was needed for economic growth. But the plans were never put into practice.
Today, the Minister declared infrastructure developments, such as water treatment plants, a priority along with partnerships with the private sector to ensure the development realises.
This is a positive step in the FF Plus’s view and a move away from previous policy directions. The current condition and shortfalls of critical infrastructure make economic development impossible.
The fact that the Minister for the first time announced decisive steps to reduce government’s wage bill, through probably offering officials who do not perform essential services early retirement packages, points to decisive action.
It is a good start. Through its participation in the GNU and its role in Parliament, the FF Plus will ensure that steps are taken to facilitate sustainable economic growth for the benefit of everyone in the country.
