This is our last chance to be saved from junk status, Mboweni

Finance Minister Tito Mboweni has been asked to come up with cold, clinically correct economic action and words that will convince credit rating agencies to give South Africa one more chance.

Organised agriculture also urged Mboweni to be firm on private property ownership if he is to reignite investor confidence.

The minister has to stop all state finance to the sinking South African Airways (SAA) and the Passenger Rail Agency of SA (Prasa) and limit the state finance of Eskom until the power utility became effective, said the Transvaal Agricultural Union (TLU SA), as Mboweni had little choice in the budget he will present in parliament today.

A key area to focus on was to increase the country’s competitiveness, said one expert.

Mboweni’s speech needed to offer more concrete proposals to truly turn things around and he must give clarity to hopes of the small and medium enterprises.

TLU SA president Louis Meintjies said Mboweni didn’t have “much leeway” in terms of the budget. Nevertheless, the organisation expected him to make a firm stand on private ownership to reignite investors trust and put an end to corruption in state departments and entities.

The minister must look at cutting state expenses like salaries, despite the demand put forward by the ANC alliance partners to increase income through taxes.

Meintjies said there should be no more financial support for sinking state entities and the support should be limited to power utility Eskom. Eskom should be given support on condition that it was able to establish effectiveness.

“The budget speech will probably contain beautiful words and smart plans. But the minister only needs to be guided by sound economic principles. Test every suggestion and decision concerning the budget by its effect on economic growth,” Meintjies said.

“Rating agency Moody’s is waiting at the door. We need cold, clinically correct economic action and words to convince credit regulators of one more chance for the country.

“You only have one chance, Mr Mboweni. We hope the country’s prosperity will weigh more than political favour.”

David Morobe, executive general manager of impact investment at Business Partners Limited, said it was key to focus on increasing the competitiveness of the country.

“This, in turn, will make South Africa more investor-friendly, spur economic activity and assist with issues like unemployment.”

Morobe believed there was still a long way to go in improving the ease of doing business in SA, but the country’s ranking in the Global Competitiveness Report had improved, rising seven places to 60th in 2019.

“SMEs contribute significantly to job creation and government could offer tax incentives to those who create new jobs to alleviate unemployment,” Morobe said.

But Kumaran Padayachee, CEO of Spartan SME Finance, warned SMEs expecting a silver bullet from government was setting themselves up for failure: “Given the difficult economic landscape, don’t expect fireworks.”

– ericn@citizen.co.za

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