Mboweni at budget crossroads

Tito Mboweni faces an unenviable balancing act in his mid-term budget statement Wednesday, trying to reconcile the need to take control of sky-high public debt with calls for more spending ahead of 2019 polls.

Mboweni, a fiscal conservative, is the country’s fifth finance minister in three years and will announce tax and spending plans amid unprecedented unemployment, a recession, shrinking tax income and ballooning debt.

“Poverty and unemployment remain painfully high and South Africans will want to be reassured that their pensions and social grant payments are secure and that government can be taken seriously in its commitment to stimulate growth and job creation for millions in need,” Kenneth Creamer, an economist with the University of the Witwatersrand said.

President Cyril Ramaphosa will be hoping that Mboweni’s stewardship of the listless economy will help the ANC rally support ahead of the 2019 polls.

Nhlanhla Nene — Mboweni’s predecessor — resigned in October when it was revealed that he had visited the controversial, corruption-accused Gupta business family several times during a previous stint in the finance brief.

READ MORE: Move over, here comes Tito

The road ahead for Mboweni will be long and winding.

The economy slipped into a recession in the second quarter of 2018 having shrunk 0.7 percent quarter-on-quarter and voters have been buffeted by soaring fuel prices and a weak local currency.

Wednesday’s statement will update treasury forecasts for revenue collection and GDP growth initially given in February — and is likely to address the R50-billion stimulus package recently announced by Ramaphosa.

‘Stabilising debt’

“Mboweni will have to continue with the objective of containing and stabilising South Africa’s debt,” Creamer added.

“A task that will be made easier if ongoing efforts to stimulate economic growth, investment and job creation prove to be effective.”

While some analysts do not expect anything dramatic, they agree that Mboweni’s “immense experience and gravitas” will hold a lot of clout.

But unions, which wield enormous influence over the ANC, are staunchly opposed to austerity policies or laying off government workers from the bloated civil service or ailing state-owned companies.

National Union of Mineworkers called Mboweni “unlawful and reckless” this week for saying that 30 000 job losses would be needed to save troubled state electric utility Eskom.

“You find that Tito Mboweni is actually not the favourite choice of trade unions… labour is not likely to support him,” University of Johannesburg’s politics professor Kwandiwe Kondlo said.

‘Job shedding growth’?

“Mboweni belongs to what was called the ‘1996 class’ project of Thabo Mbeki which believed in strict fiscal measures and a project that supported growth, employment and redistribution.

“[It] did see South Africa’s economy growing — but that was a job shedding growth.”

Peter Attard Montalto, head of capital markets research at Intellidex, said that whatever Mboweni announces could be superseded by political manoeuvering.

“We think there will be growing pressure from the Economic Freedom Fighters (EFF) into the ANC national executive committee that this is not a stimulus, there is no new money,” Montalto said, referring to the EFF.

“This dynamic will play into a key time of economic populism” ahead of polls, he added.

Montalto suggested pressure could mount to nationalise the central bank alongside acceleration of forced redistribution of land from wealthy white owners to poor black recipients.

Land reform is a flashpoint since Ramaphosa vowed to change the constitution to explicitly allow for expropriation of land without compensation to redress the inequalities of colonialism and apartheid.

In an unprecedented move, Mboweni has asked citizens on social media for tips on what they would like to see coming out of his debut mid-term budget.

Education, the public sector wage bill and the crisis in public health care are also among the key issues expected to be dealt with.

Subscribe to the M&G

These are unprecedented times, and the role of media to tell and record the story of South Africa as it develops is more important than ever.

The Mail & Guardian is a proud news publisher with roots stretching back 35 years, and we’ve survived right from day one thanks to the support of readers who value fiercely independent journalism that is beholden to no-one. To help us continue for another 35 future years with the same proud values, please consider taking out a subscription.

Michelle Gumede
Michelle Gumede
Blossoming- Writer - Environmentalist- Intersectional Feminist- Art aficionado.

Related stories

There are useful lessons to learn from the generation of the 1986 emergency

The parents of the 2020 crisis have little say about their children’s education

‘I will have to repeat grade 8’

Schools have been closed again. After months of doing schoolwork at home, not all parents think their children are ready to move to the next grade

Covid-19 is an opportunity to make our circles bigger

Xenophobia stalks us in this moment of crisis; our hope lies in humanity’s capacity to rebuild

‘The corrupt must go to jail’

As Gauteng braces itself for its Covid-19 peak, the provincial government says it is knuckling down to deal with ‘shameful’ corruption allegations

Vigorous policing of petty crime during the pandemic suggests a Pyrrhic defeat

The ideological aims of the criminal justice system in dysfunctional societies, like South Africa, is to indirectly legitimise the inequitable economic system

Covid puts green energy in a coma

The coronavirus pandemic has disrupted governments’ plans to flatline the upward trajectory of global warming

Ingonyama Trust Board moves to retrench staff

More than 50 workers at the Ingonyama Trust Board have been issued section 189 notices

Tito needs the IMF, South Africa doesn’t

The IMF loan is given with false motivation — to provide political cover for entrenched neoliberalism and deep cuts in the public service

No proof of Covid-19 reinfection, yet

Some people report testing positive for Covid-19 after initially having the disease and then testing negative. Scientists are still trying to understand if this means that reinfection is possible

press releases

Loading latest Press Releases…

The best local and international journalism

handpicked and in your inbox every weekday