The Minister of Finance, Tito Mboweni, delivering the supplementary budget on Wednesday afternoon, says South Africa faces a huge debt crisis unless the deficit is stabilised, adding that while the country has much strength, debt is SA’s biggest problem.
But Institute of Race Relations Deputy Head of Policy Research, Hermann Pretorius, says the Minister’s budget speech takes no steps to address South Africa’s debt. Pretorius says it is concerning that nothing has been done to the public wage bill.
“In the emergency budget, Minister Mboweni warns of the danger of debt, but takes no steps to address this. He gives a strong indication of R40 billion increases in taxes over the next four years while failing to reduce the size of the bloated public wage bill or turn off the tax-taps to failing SOEs.”
According to the Minister, the severe economic downturn caused by the coronavirus pandemic has made the adjusted budget necessary.
“Looking ahead, the Minister seems to place our country’s economic hopes on vast infrastructure expenditure with money we simply do not have. You cannot borrow your way out of debt or spend your way out of insolvency,” says Pretorius.
Mboweni announced more than R30 billion to support increased screening and testing of the coronavirus as the economy continues to re-open. He says provinces will add at least R5 billion more for the education catch-up plan and social welfare support for communities.
“The Minister’s unaffordable infrastructure spending plans are probably a consequence of his wanting to use this emergency budget to kick the fiscal can down the road, only to realize that he has to borrow desperately to build more road first,” concludes Pretorius.
In the video below, Minister Tito Mboweni’s tables the budget:
Below is the Full speech: