Finance Minister Tito Mbowni has hailed the Ramaphosa administration’s achievements in responding quickly to the current economic shock from the coronavirus lockdown. He says despite adjusting its budget due to the COVID-19 crisis, a lot has been done to help resuscitate the economy.
Mboweni delivered his supplementary budget online on Wednesday, acknowledging government’s rapid announcement of coronavirus package totalling R500 billion. He says this is one of the largest economic response packages in the developing world.
The South African Reserve Bank has also cut interest rates and made it easier for banks to lend money. Mboweni elaborates on other measures taken to help the economy recover.
“The Reserve Bank has supported liquidity in the domestic bond market. The Bank has stated that it stands ready to take additional action, should the need arise. More than 2 million customers have received around 30 billion in relief from their commercial banks. Insurers and medical aids have provided premium holidays. Landlords have provided rental relief. All in 100 days,” the Minister explains.
Dealing with SA’s sovereign debt crisis with Economist Thabi Leoka:
Reactions to Mboweni’s speech
Chamber of Commerce and Industry Alan Mukoki says it’s a relatively fair Supplementary Budget Speech, given the complicated economic situation the country finds itself in during the coronavirus pandemic.
Mukoki says Mboweni is walking on a tightrope.
“What the minister of finance had to do was juggle a lot of balls in the air in a very difficult supplementary budget situation, given all these external shocks that have taken place. But as the South African Chamber of Commerce, we have always maintained that to get through all these systems obviously COVID-19 hides the fundamental nature of trouble that we are in any event purely because we had entered a technical recession before the COVID-19 lockdown. Thirdly, we are then faced with a situation where all the rating agencies downgraded our credit rating.”
Treasury proposes an additional R25,5 billion for Social Development:
Academic and economist, Professor Mingiri Kapingura, from the University of Fort Hare, has praised the Budget Speech, saying it does a reasonable job of trying to allocate resources in a time of crisis.
Kapingura believes that there are some key points that the speech lacked, but it is acceptable under the circumstances.
“There wasn’t much said about the issue of the borrowings. We have done where the money is coming from. Whether taxes will be increased, nothing was said to that regard. Well, I’d say given the circumstances and situation in which we are as a country even if at global level I think this is the best we can get.”
‘No clear message’
The Democratic Alliance (DA) has expressed disappointment at the supplementary Budget Speech, saying the minister could not give a clear message on how the government would get the country out of the current economic crisis.
DA Spokesperson on Finance Geordin Hill-Lewis says Mboweni was only able to explain the extent to which the country is in crisis and had no clear strategy on how to rescue it.
“The Minister’s emergency Budget Speech today was disappointing in the sense that there was no clear plan as to how the government plans to get this economic crisis around and get South Africa and avoid a full-blown the sovereignty crises over the next few years. The minister was very good at describing how bad things are; and how much worse they can get over the next few years unless we get things around. His speech was basically a plead to his own government, to the ANC to please help him to turn things around.”
State wage bill
Meanwhile, the Freedom Front Plus (FF+) says the Minister has failed to explain in his supplementary budget how the government plans to reduce the state wage bill.
The FF Plus says it is clear that South Africa is fast becoming a welfare state.
Party leader Dr. Pieter Groenewald says, “This was not an emergency budget. There are more questions than answers. The minister moved in the right direction with the zero-based budget, but we will still have to see if that will happen in practice. What is worrying is the fact that the wage budget has not been addressed and still dependent on the negotiations with the unions. At this moment, we also see that we are becoming more like a social welfare state because R25.1 billion has been allocated for social services. We also heard about a R100 billion for job creation.”
EFF rejects zero-base budgeting approach
The Economic Freedom Fighters says it rejects the approach of zero-base budgeting introduced by the Finance Minister. EFF Chief Whip Floyd Shivambu says zero-base budgeting tends to ignore the basic budgetary obligations made by the government on expenditure.
“The Economic Freedom Fighters does not agree and therefore rejects the philosophy of the zero-base budget as introduced by the Minister of Finance Tito Mboweni. What zero-base budgeting does is to ignore and basically neglect all the budgetary obligations and the commitments that the state has made to all expenditure items of the state. We think that is problematic and must be rejected by all of society. And this must be rejected as part of the austerity measures that were introduced in February.”
COPE’s Dennis Bloem says the high levels of unemployment are a ticking time bomb and the situation is worsened by corruption.
COPE’s National Spokesperson says, “Minister Tito Mboweni can try every trick in the book but he can’t address the country’s problem. The country’s unemployment figure stands at 10 million. This is a ticking time bomb that can explode anytime.”
South Africa is expected to miss its tax target for this year by over R300 billion. SARS Commissioner Edward Kieswetter explains: