Today in his Medium-Term Budget Policy Statement (MTBPS) or 'mini budget', the Minister of Finance, Enoch Godongwana, painted a sombre picture of South Africa's economy and fiscus.
He admitted that there are numerous risks hampering economic growth in the short to long term.
The chaos that broke out before the Minister's speech in the parliamentary session in Cape Town's City Hall points to the serious crisis in which South Africa finds itself. The EFF's conduct does not contribute to investor confidence at all.
In his speech, the Minister painted a comprehensive picture of the country's already familiar problems, like the crises at Eskom and load shedding as well as government's wage bill and bankrupt public enterprises. However, no real solutions were offered.
He did mention that there is a possibility that government could take over a significant portion of Eskom's debt, but did not say how much.
Merely saying that they are working on finding a solution to the Eskom problem instils no confidence. Eskom's problems did not start yesterday.
Another seemingly unsolvable problem, government's wage bill, is disproportionate to the rest of the world. The same goes for the ratio between the public and private sector's salaries.
No solutions were offered in that regard either, apart from keeping to the current increase of 3%. The relevant trade unions will most probably not be satisfied with that.
Government debt is still out of control and currently stands at R4,75 trillion. The financing costs are exorbitant and put a lot of pressure on the fiscus.
Although there is a tax windfall of R83 billion, the budget deficit and government debt continue to climb. At present, the financing costs of the debt amounts to R307,7 billion.
If government were to take over a large portion of Eskom's debt, these financing costs could skyrocket with up to R15 billion.
The budget deficit is estimated at R323 billion, or 4,9% of the Gross Domestic Product (GDP).
The tax windfall must, therefore, be used wisely to stimulate the economy, instead of addressing immediate shortfalls.
At this stage, it seems that a large part of it will be used to finance government debt and save failed public enterprises.
It would have been a much better investment in the future to use it to repair infrastructure, which would stimulate economic growth and create jobs.
According to the Minister, infrastructure is a priority. In reality, however, the opposite is true as infrastructure keeps decaying and there seems to be no hope for improvement.
The structural reforms that should have been implemented did not realise, despite expenditure. Nothing is achieved if the Minister just keeps saying it must be done. These reforms were announced two years ago, but nothing has been done.
An amount of R23,7 billion was allocated to SANRAL to settle some of the entity's outstanding debt.
An additional R204,7 million was allocated to Denel in an attempt to improve the failed entity's debt position, and a further R3,4 billion to implement a turnaround strategy.
At this stage, the country's financial future looks like a dark tunnel with expenditure and debt steadily increasing along with social needs, while there is no sign of economic growth.
It is a dire situation, one that is not sustainable. The ANC must be overthrown in 2024, before it completely destroys the country.
