Opposition parties have given Finance Minister Tito Mboweni’s Medium Term Budget Policy Statement (MTBPS) the thumbs down.
MPs from various parties in the National Assembly on Wednesday reacted adversely to news of alarmingly rising debt levels, lower-than-forecast growth and a shortfall in tax collections.
However, the nation’s official opposition, the Democratic Alliance (DA) was encouraged by the minister’s tough talk on cutting the public wage bill.
Mboweni revealed that the average wage increase across government stood at 6.8%, or 2.2% points above inflation.
DA finance spokesperson Geordin Hill-Lewis said: “He was tough on waste, on SOEs and the public sector bill but his language didn’t match the action.”
Economic Freedom Fighters chief whip Floyd Shivambu believes it’s high time government reimagines the way it does business, reconfiguring to move away from tenders which he said led to cost overruns and wastage.
“Every time he must administer tenders. Why doesn’t he employ engineers to directly build roads, that will save a lot of money.”
For its part, the Freedom Front Plus gave Mboweni the thumbs up for his analysis, but a solid thumbs down for what they believe was a speech lacking in solutions.
MBOWENI PUTS SA’S DEBT IN FOCUS
The minister opened the cupboard on the country’s finances only to show that it was nearly bare.
He warned that urgent economic reforms are needed if the government is to rein in its debt, which threatens to top 70% of GDP in three years.
The national debt was R3 trillion this year and is expected to rise to R4,5 trillion in three years’ time if there are no policy changes.
He also laid down the law for state-owned companies, saying there would be no more bailouts but instead loans, which would have to be repaid with interest.
The minister is set to brief Parliament’s finance committees on the statement later on Thursday.
On the current trajectory, in three years’ time, the cost of servicing government debt will be more than what the state spends on health and economic development.
The finance minister pulled no punches: “Our problem is that we spend more than we earn, it’s as simple as that.”
He said stabilising public finances would involve difficult decisions and sacrifices by all, especially in reining in the public servant payroll, which could see a clash with unions.
“We will need to deal with the challenges of the wage bill, state-owned companies, executive remuneration and benefits and fiscal leakages.”
Mboweni also hinted at tax measures that could be unveiled in his February Budget, as the government needs to find R50 billion a year over the next three years in a bid to try and balance the books.
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