Expect ‘hell’ in ‘unpopular’ medium-term budget
'This is not about a balancing act. [Tito Mboweni] is going to have to be on the offensive and start saving money wherever he can,' one analyst says.
Finance Minister Tito Mboweni. Picture: Gallo Images
Commentators expect an unpopular medium-term budget, low on spending and heavy on savings, ahead of its delivery tomorrow by Finance Minister Tito Mboweni.
While unions were divided on hot-button issues such as the public wage bill, South African Federation of Trade Union (Saftu) general secretary Zwelinzima Vavi said the working class should expect “hell” from it.
After Mboweni’s tweet in which he lamented government’s wage bill, Vavi said his statements could cause government to run out of money for basic services.
But the research director at the Mapungubwe Institute for Strategic Reflection, Ralph Mathekga, said the time for balancing acts and popular budgets was over.
Mboweni was likely to irk many South Africans to thwart further economic disaster.
“He is not being quiet in confronting a very difficult issue, especially with the unions. He is saying there is no money and you can raise taxes, but you do not want to push that too far where the economy ends up depreciating,” Mathekga said.
“But this is not about a balancing act. He is going to have to be on the offensive and start saving money wherever he can.”
The pressure of delivering on President Cyril Ramaphosa’s promise of austerity would also weigh heavily on National Treasury’s decisions.
Saftu expects radical changes and a move towards nationalisation.
“We also hope he will reverse the sugar tax and the increase in VAT,” Vavi said. “We need to move towards a different economic path, because the one we are currently on is not working.”
He said the federation was expecting higher inflation rates and more hardship for the working class.
Attempts to reach rival union federation Cosatu officials yesterday were fruitless.
According to economist Sean Muller, Mboweni was expected to prioritise Ramaphosa’s fiscal consolidation plan, given the low revenue collection expected following the downward growth of the economy this year.
“What we can expect is for the medium-term budget to continue trying to stabilise the debt trajectory.
“That probably means further measures to increase taxation. But especially with an election looming, the negative aspects will be downplayed,” Muller said.