A Debt-servicing Budget Delivered by Minister Mboweni

The IFP notes with concern the alarming rate at which our debt to GDP ratio is ballooning out of control. The Budget Speech, delivered today by Finance Minister, Tito Mboweni, raises many alarm bells and is cause for concern for all South Africans.

With the expected debt to GDP ratio rising to almost 90% over the medium-term, with insufficient measures in place to reduce this, our economy is at severe risk of going into a recession.

This Budget appears to be one that only services the needs of our State-Owned Entities (SOEs).

Debt-servicing costs and further bail-outs of failing SOEs, such as ESKOM and SAA – to the tune of over R36 billion – show government is once again throwing money at non-financial issues at these entities.

Year-on-year, the IFP has called for greater participation by and inclusion of the private sector, to assist and mitigate the risks to government. Yet it appears that once again this proposal for the privatisation of SOEs has fallen on deaf ears.

Financial positions of public entities and municipalities are weak because of fruitless and wasteful expenditure, which IS A SERIOUS ISSUE.

In dealing with the public wage bill, the proposal of cutting salaries is a big “no” in our opinion. Instead, rather than bringing new people into the system, we should conduct an audit to ensure that where there is overstaffing, we move employees to those Departments that are short of staff.

Then there is the problematic issue of cadre deployment – where people are employed for activism in the ANC and not for their expertise or fitness for purpose.

Dealing with all the inefficiencies in the system must be a priority and those who add no value and are liabilities must be laid off. This will ease the pressure on the public sector wage bill.

Further, we are displeased with the relative increase in the division of revenue allocated to Local Government. A mere 8.8%, rising to 9.7% over the MTEF, is allocated to the sphere which is closest and most effective in delivering services directly to the public – yet it gets the smallest slice of the cake. It is not fair that National and Provincial budgets are bloated and remain ineffective.

With ever-rising unemployment, as per the Quarter 4 results released by Stats SA yesterday, these figures do not bode well for our economy under strain and with the current lockdown regulations in place.

Furthermore, unemployment must be the priority of the private sector, not that of government. The ballooning public sector wage bill will now receive a further R11 billion, which will be added to fund the public employment initiative. This is contrary to President Cyril Ramaphosa’s address to the Nation earlier this month.

Government cannot afford these programmes and the risk of going into further debt.

The IFP however, welcomes the R11 billion towards youth unemployment and the further injection of over R4 billion for rural and township economic development.

What is also alarming is that funding for the Covid-19 vaccination programme may potentially run up to R19.3 billion, of which an estimated R9 billion will be used over the medium-term. This, while we are only investing a mere R100 million towards vaccine research, which will go to the South African Medical Research Council, and a further R50 million, which will go to Government Communications Systems.

Our country’s economic outlook remains highly uncertain and the short-term growth is dependent on the vaccine roll-out, which seems to be moving at alarmingly slow pace.

Contact:
Inkosi Mzamo Buthelezi, MP
IFP Deputy President & Spokesperson on Finance
072 390 6112