Professor Jannie Rossouw of the University of Witwatersrand’s department of economics says Finance Minister Tito Mboweni should announce decisive plans on how to deal with under-performing state-owned enterprises.
Final briefings with the President on Budget2020. Tuynhuys, Cape Town. February 25, 2020. pic.twitter.com/mATJLokCRg
— Tito Mboweni (@tito_mboweni) February 25, 2020
Rossouw says some SOEs have become costly for the tax-payer.
The crisis at Eskom is expected to feature prominently in Mboweni’s budget speech in Parliament on Wednesday afternoon.
Eskom’s problems top a list of crucial matters that must be urgently addressed as South Africa struggles to hold on its only remaining investment grade credit rating.
He says decisive action is needed because SOEs such as South African Airways (SAA) are burden on the tax-payer.
“Let me start with SAA, since five years ago, the government should [have] simply given it away, by now. There’s nothing left to give away, simply close it, the same with SAA express, the same with DENEL. These are not mission critical state-owned enterprises, just get rid of them because they cost tax-payers a lot of money,” adds Rossouw.
“Eskom is of course mission critical and in terms of Eskom, it’s important for the government to increase transparency. There’s no reason why Eskom’s contracts can’t all be published on its website,” explains Rossouw.
Professor Jannie Rossouw was on Morning Live discussing expectations ahead of the 2020 budget speech:
There’s much anticipation that Mboweni will make an announcement on whether government is scrapping e-tolls when he delivers his budget speech.
The minister has always been vocal about his position on the future of e-tolls and has been encouraging motorists to pay for the e-tolls.
Mboweni has indicated in previous budget speeches that he supported the user-pay principle when it comes to e-tolls.
Gauteng e-tolls timeline:
Calls for a pro-poor budget:
Some civil society organisations, including labour are calling for a pro-poor budget that also protects jobs.
The South African Federation of Trade Unions (SAFTU) General Secretary Zwelinzima Vavi has met in Cape Town with organisations that represent the unemployed in the country, in what they call the “Assembly of the Excluded”.
Vavi says this is in preparation for their picket during Mboweni’s budget speech. He says they will present suggestions to Parliament on formulating policies to grow the economy.
“We are saying basically government proposals have dismally failed the black young people in this country, and we think that government must now look at alternative proposals from people who are affected by unemployment themselves, to say to government abandon your austerity programs, abandon your neoliberalism and embrace a people-centered budget, a budget that will stimulate economic growth and be redistributive.”
The minister will be mindful of a possible downgrade by rating agencies.
Moody’s is the only major agency to still have South Africa’s credit rating above junk status.
It recently revised South Africa’s growth forecast for the year down from 1% to 0.7%.
Business Leadership South Africa CEO Busisiwe Mavuso on how will Mboweni retain SA’s investment grade?
Public sector wage bill:
In his Budget speech last year, Mboweni identified the public sector wage bill and SOEs as the biggest fiscal risks, so expectations are high – but how far he will be able to go in curbing state worker salaries or spelling out a plan for Eskom’s massive debt remains to be seen.
During his Medium-Term Budget Policy Statement, Mboweni proposed significant cuts in government spending:
On the country’s debt:
During his mid-term budget policy statement in October last year, the minister said the annual cost to service SA’s growing sovereign debt had reached R204 billion.
The minister will provide an update on the country’s debt position, as well as projections for the country’s debt-to-GDP ratio.
SABC Digital News will live stream the minister’s budget speech at 14:00 CAT. – Additional reporting by SABC Digital News