Finance Minister Enoch Godongwana's mid-term budget plan has been met with criticism from political parties. The Democratic Alliance (DA) rejected the plan, arguing it lacks an effective technique to accelerate economic growth, resolve relentless blackouts, stabilize debt, reign in runaway expenditure, support vulnerable South Africans, and combat corruption. The DA's Dion George noted the minister's announcement of private-public partnerships to rebuild South Africa's crumbling infrastructure, but they argue that this is where the good news ends.
The DA's Dion George said the government's commitment to unbundling Eskom is not moving fast enough, and the entity continues to generate enormous losses. The DA also noted that the government has had to cut expenditure on service delivery and social spending without any bold initiatives, leading to further cuts in department budgets.
Georgia's Dion George said the minister had no alternative to increased borrowing and delayed debt stabilisation due to slow economic growth and the irresponsible takeover of state-owned enterprises (SOEs) and municipal debt to Eskom. They also noted that the Treasury is working with the Department of Public Enterprises and Transnet to either offload the entity's debt on the sovereign balance sheet or bail it out.
The DA lamented that the public sector wage bill continues to balloon unsustainably, and the mid-term budget speech was confirmation that the government does not care about the plight of struggling South African households who are unable to put enough food on their tables. The IFP leader, Velenkosini Hlabisa, expressed deep concern at the state of the nation and the continued mismanagement of the economy by the ruling party, citing there was nothing to celebrate in the budget statement.
The South African Finance Federation (EFF) has criticized the expansion of the presidential stimulus programme, arguing that it is not a genuine source of job opportunities but rather a political tick-box exercise. The EFF criticised the proposed cuts of direct provincial conditional grants of R6.2bn, which include poverty relief and infrastructure development, early childhood development grant, education infrastructure grant, and other grants meant for much-needed social infrastructure. They also pointed out that the National Treasury chooses to fold its arms and watch as municipalities fail to further the austerity agenda.
The EFF maintained that the minister does not have a believable and practical plan to stabilise government debt, which is now sitting at R4.8-trillion with annual borrowing requirements increasing to R553bn per year. Instead, the nature and character of South Africa's borrowing is shifting from domestic pensions and insurers, which are rand-denominated, towards financial institutions such as the IMF and World Bank, whose debt is in dollars, deliberately undermining South Africa's sovereignty for short-term political ends.
The EFF said the budget statement does not propose any tangible plans to support measures to grow the economy beyond the rhetoric peddled by President Cyril Ramaphosa. They also noted that the energy transition section of the mid-term budget policy statement is as empty as the government’s approach towards addressing the challenge of load-shedding, with no mention of short, medium, to long-term on and off-grid solutions targeting poor households and SMMEs.
The EFF also noted the allocation of R34bn to extend the Covid-19 social relief of distress grant. Still, the National Treasury refuses to come up with a concrete and permanent solution to address the gap of millions of people who do not have any means to earn an income, including income to survive daily. They called for a comprehensive and sustainable safety net, including a grant for unemployed graduates.
The EFF believes that the fiscal policy under the ANC government is directed towards the beheading of the state and strategic assets instead of using it as an instrument for meaningful economic transformation and industrialisation, particularly the procurement budget.
According to the EFF, the National Treasury cannot be trusted to lead South Africa into a new path of economic growth when all they are obsessed about is austerities.
