The country’s going broke at a rapid rate

Travel through the Sandton CBD on a Friday afternoon, marvelling at the steel and glass architectural masterpieces, the shiny red Ferraris and the perfect taste of barista-brewed cappuccino, and it is difficult to see much wrong with South Africa.

Listen to new finance minister Tito Mboweni and the joking, almost offhand, way in which he presents a budget which contains no major shocks, apart from a little bit of increased tax discomfort for the well-off, and the impression of essential well-being is reinforced.

But are we kidding ourselves as a nation, and potential foreign investors? The Fiscal Cliff Study Group predicts South Africa will run out of money by 2042 if measures are not taken by the government. The head of the group, professor Jannie Rossouw, told parliament that the country’s economic position had declined significantly since last year’s budget.

He said SA will go broke if it does not cut civil service salaries, social grant payments, government debt and other expenses.

On the other hand, Free State University Professor Philippe Burger cautioned against such predictions, because they assume nothing will change.

Burger and other optimists believe that the Cyril Ramaphosa presidency – and its commitment to crack down on corruption and looting of government resources – could change the way the country has been running.

Yet, the inescapable reality is that if the sort of changes promised by Ramaphosa’s Thuma Mina are coming, they need to get here soon. The bottom line: government is spending far more than its revenue. Ordinary people call it going broke – no matter when it happens.

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