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An underwhelming mini budget speech which offered a thorough diagnostic of South Africa’s economic challenges, without offering concrete solutions.
This was how political and financial stakeholders described Finance Minister Tito Mboweni’s maiden Medium-Term Budget Policy Statement (MTBPS).
The sentiments came after Mboweni on Wednesday announced that he had slashed the forecast tax revenue he expected the government to collect over the three years ending March 2021, by R85 billion due to lower forecast growth and unanticipated overdue Valued Added Tax (VAT) refunds.
The Democratic Alliance’s shadow minister of finance, David Maynier, described the budgetary statement as a “full-scale budget blowout”, which was a clear sign that the “new path” – undertaken under the rhetoric of “Thuma Mina” by President Cyril Ramaphosa – of economic growth, employment and transformation was failing.
“The medium-term budget policy statement reveals a full-scale budget blowout, with stagnant economic growth (2%), lower-than-expected revenue (R85 billion), higher-than-expected expenditure (R12 billion) and “bailouts” of state-owned enterprises (R9 billion), including a R5 billion “bailout” of zombie state-owned airline, South African Airways,” bemoaned Maynier.
He also criticised the fact that, as compared to the 2018 budget proposal, Mboweni’s midterm budget statement highlighted a significant “fiscal slippage”, with:
• The fiscal deficit increasing by R22 billion in 2018/19, R33 billion in 2019/20 and R41 billion in 2020/21;
• National debt increasing by R19 billion in 2018/19, R55 billion in 2019/210 and R103 billion in 2020/21; and
• The national debt will now only stabilise two years later at 56.5% of GDP in 2025/26.
EFF chief whip Floyd Shivambu labelled Mboweni’s midterm budget statement as “underwhelming”, citing that the new finance minister offered a “thorough diagnostic of South Africa’s economic challenges” without offering “any concrete solutions”.
Cosatu’s parliamentary co-ordinator, Matthew Parks, expressed similar sentiments.
“The minister also failed to outline how government will deliver on the job summit agreement it signed,” said Parks.
ANC treasurer-general Paul Mashatile, however, described the medium-term budget speech as “pro-poor” due to the minister’s announcement of a number of zero-rated VAT items that included sanitary towels.
In all fairness, the speech did not represent much of Mboweni’s turnaround strategies as he has only been in office for just over two weeks.
However, it gave insight into the fact that he was not going to increase VAT come the budget speech next year.
Mboweni instead made it clear that he sought to boost the Treasury fiscal position by resurrecting the unpopular e-tolling system.
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