Tito on a hiding to nothing
The Advisory Council insists economic growth is key to surviving the crisis, but that’s easier said than done, while the unions want the long term unemployment grant to be extended and insist the SOEs must be fixed.
Finance Minister Tito Mboweni places an Aloe ferox plant on the podium prior to delivering his budget speech in parliament, 26 February 2020. Picture: AFP
There’s not many people who would want to be in Finance Minister Tito Mboweni’s shoes when he delivers the medium-term budget policy statement this afternoon. While our economy was certainly on the ropes before Covid-19, the pandemic has decimated it.
After two million jobs were shed, just how much tax revenue has been lost will have a massive impact on the road forward. As will the extent of our debt. What to do with our failing state-owned enterprises (SOEs), while coming up with measures to reverse poverty and inequality, must be addressed.
In his economic recovery plan, President Cyril Ramaphosa outlined government’s plan to revive it with short-term and long-term interventions. If it goes according to plan, according to him, we should show an average GDP growth of 3% over the next 10 years.
While the president touched on key initiatives to kickstart the growth – including providing jobs, energy supply, the fight against corruption, support of local businesses and building infrastructure – the plan lacked detail. That’s where Mboweni comes in. While satisfying – if that is at all possible – the Presidential Economic Advisory Council and the unions, the minister must give clear-cut direction.
The Advisory Council insists economic growth is key to surviving the crisis, but that’s easier said than done, while the unions want the long term unemployment grant to be extended and insist the SOEs must be fixed. But further bailouts are a no-no.
We also just can’t afford new tax hikes above of what was already announced this year, considering our already high tax burden. Mboweni really is on a hiding to nothing, dealing with the unknown of how further waves of Covid could further destroy the economy.
In a tweet earlier this month, Mboweni said: “There are times when challenges seem insurmountable. But the duty of stateswomen/statesmen is to lead. Solve what seems unsolvable. This is the time. Ke Nako!” In these dark and uncertain times, the time has come. It’s over to you, Mr Finance Minister.
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