The devil is always in the detail, even when there seems to be no detail. This point, from a note from Nedbank, really does sum it up:
“The fact that funding from the Infrastructure Fund will be shifted to finance the cash gratuity in the 2021/22 wage bill, also reflects negatively on the government’s ability to prioritise growth-generating spending, over that of consumption.”
Still it came in well short of the worst fears of analysts. The flamboyance was limited to metaphor and wardrobe, a little like Tito Mboweni, who came before, although the new guy is no match for the Avo King.
I was disappointed when Enoch Godongwana’s maiden Medium-Term Budget Policy Speech in Parliament did not start off with an acknowledgement of the death of FW de Klerk and perhaps offering condolences to his family.
A newsflash announcing the death of ‘apartheid’s last president’ was running alongside the warm-up to the Budget speech so it really was hot news
. To not even acknowledge the death of the man who presided over the release of Nelson Mandela and who played an important role in SA’s transition to democracy, no matter how inevitable that was, seemed in poor taste to me.
Ed’s note: I will be referring to the finance minister merely as Enoch. And why not? We called Mr Mboweni ‘Tito’ and Mr Gordhan ‘Pravin’. Besides Godongwana is not exactly headline-friendly … unlike the recently departed FW and that old finger-pointer who came before him.
As for the mini-Budget itself …
Finance minister after finance minister makes the right noises while the decision-makers in the background make bad choices.
Godongwana hinted at the puppetry inherent in the position when talking about the emergency social grant of R350 and if it would be extended beyond March next year.
He said government, not National Treasury, would decide what happens.
It seems unconscionable to announce only in the Budget in February that this lifeline for so many people is indeed being cut off at the end of the following month. But then I suppose the very idea of ending a distress grant that means so much to the 9.5 million people who receive it, as the evidence seems to suggest, is unconscionable.
The speech was anxiously watched by analysts who feared that the recent tax windfall from the commodity boom (an extra R120 billion-plus collected) would lead to some exuberance on the spending front. The commodity boom is already waning and we are still way up shit creek, they all cried.
Even if the revenue side has had a nice shot in the arm, expenses are much higher too, thanks to:
- Relief packages in response to the riots in KwaZulu Natal and Johannesburg
- The damn public sector wage settlement, a recurring nightmare for South Africans
- Demands from Sasria, the state-owned company that provides short-term cover against special risks such as strikes, riots, public disorder and terrorism (they have had a busy and expensive year), and other SOE’s.
The consensus after the speech was that Enoch had largely held the line on spending. “Mounting debt-service costs are a clear signal that South Africa must stabilise its public finances to redirect spending in favour of social and economic development,” he said.
Giving a little scary detail, he said 21 cents in every R1 of tax collected went to servicing debt (R334.5-billion in 2021). Continuing on this trajectory would mean that in the 2024/25 financial year debt service costs would have ballooned to R365.8 billion “crowding out expenditure on essential services as health, social development and peace and security”.
The bottom line is that there is no money for spending, most certainly not on a Basic Income Grant, which more and more people think is the solution for South Africa.
But, to be honest, the man really seems to have just kicked the can down the road to February. The odds on that being a good call (ie not his problem) are even. The Budget is a full three months away and we all know how often and suddenly that revolving door at the Finance Ministry rotates.