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2 minute read
22 Jun 2020
5:42 pm

Mboweni’s ‘resilience budget’ will be ‘most significant in recent history’

News24 Wire

Negligible economic growth and high levels of debt have obliterated South Africa's ability to save in times of plenty, and to spend in a time of crisis, the DA says.

Tito Mboweni. Picture: Getty Images

The DA expects a “resilience budget” from Finance Minister Tito Mboweni when he tables an adjustment budget on Wednesday, in response to the Covid-19 pandemic.

“There is no doubt that the ANC-led government will table this emergency budget with blood on its hands,” said DA spokesperson on finance Geordin Hill-Lewis at a press briefing on Monday.

He was joined by interim party leader John Steenhuisen, deputy finance spokesperson Dion George, and DA policy head Gwen Ngwenya.

Steenhuisen described it as the most significant budget in the country’s recent history.

Hill-Lewis said negligible economic growth and high levels of debt have obliterated South Africa’s ability to save in times of plenty, and to spend in a time of crisis.

“In short, South Africa has lost resilience. Businesses are vulnerable, families are vulnerable, government is vulnerable. Many people have lost their lives and livelihoods, who need not have. There is no doubt that the ANC-led government will table this emergency budget with blood on its hands,” he said.

He said, as a result, South Africa urgently needs a resilience budget – one which acknowledges that neither austerity (sharp cuts to basic services) nor a big expansion in spending is now possible.

The only available option is a very careful deployment of debt to fund the crisis response, while ensuring economic reform can spur growth and show a clear path to debt stability, according to Hill-Lewis.

To achieve growth, the DA wants to see the following reforms:

  • Cutting the public sector wage bill;
  • Selling or shutting down state-owned enterprises that cannot remain viable without state bailouts, end Eskom’s monopoly and open the electricity market to competition; and
  • rejecting investment-killing policies of expropriation without compensation, a National Health Insurance, prescribed assets and the nationalisation of the South African Reserve Bank.

“It would be wrong to prioritise SAA bailouts over funding the Covid response,” George said.

The DA proposes three principles to guide spending priorities:

  • Impact on growth: spending must be aligned to interventions which have the most significant multiplier effects.
  • Contribution to the social net: In addition to high levels of poverty (over 50% of the population is chronically poor), over 20% of South Africans face a high risk of slipping into poverty. Meaning over 70% of the population lives with poverty as a constant threat.
  • Efficiency: Spending which enhances government efficiency must be prioritised, e.g. skilled personnel, efficiency-enhancing technology, etc.

Mboweni’s tabling of the Adjustments Appropriations Bill – or adjustment budget – is scheduled for 3pm on Wednesday, in a virtual sitting of the National Assembly.

It usually takes place in October, but parliament has expedited processing the Appropriations Bill, which was passed in the National Council of Provinces on Friday, to allow Mboweni to table this budget to fund the government’s response to the pandemic.

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