Opposition parties pile pressure on Mboweni ahead of MTBPS

Tito Mboweni has taken over as finance minister in the midst of a recession and with government debt at worrying levels.

President Cyril Ramaphosa and Finance Minister Tito Mboweni. Picture: EWN.

CAPE TOWN - New Finance Minister Tito Mboweni is expected to put flesh on the bones of the stimulus package President Cyril Ramaphosa has announced as part of efforts to spark economic growth and job creation.

Mboweni has taken over as finance minister in the midst of a recession and with government debt at worrying levels.

He has to try and restore confidence in the government's ability to manage the country's finances.

Opposition parties are clamouring for a leaner government that costs less.

The Democratic Alliance’s (DA) David Maynier says: “We cannot expect ordinary people, who are battling to make ends meet as a result of tax increases and petrol price hikes, to continue to fork out for bloated executives and legislatures, for staggering national debt and debt service costs, and for zombie SOEs.”

The African Christian Democratic Party’s Steve Swart says Mboweni is under enormous pressure but needs to hold the fiscal line.

“All in all, he’s got a very difficult balancing task considering that we are within an election year and there are populist demands, but he must stick to a strict fiscal consolidation path.”

The Inkatha Freedom Party’s top tips for Mboweni include cutting the public sector wage bill and easing the price pressure at the pumps by suspending fuel levies.

Mboweni will be under intense pressure when he delivers the Medium-Term Budget Policy Statement on Wednesday afternoon.

WATCH: What to expect from Mboweni's maiden MTBPS

BIG CHALLENGES

As Mboweni prepares to deliver his maiden MTBPS, one of his biggest challenges is to steer South Africa away from falling over a fiscal cliff.

This is the point where the government's spending on servicing its debt, paying civil servants and providing millions of households with social grants soaks up all the revenue it can raise through taxes and levies with nothing left to pay for service delivery or the building of infrastructure.

Mboweni will give an assessment of the state of the economy and the country's finances, as well as detail spending priorities for the next three years.

Mboweni has acknowledged the size of the government’s wage bill dilemma, warning the country can’t afford to reach a point where eight in every ten rand of state revenue goes on civil servants’ salaries.

Wits University’s Professor Jannie Rossouw heads the Fiscal Cliff Study Group. He says 70% of the revenue collected by the government is spent on state salaries, social grants and servicing the government’s debt.

“The civil service remuneration bill has really grown out of control. The biggest challenge facing the Ramaphosa administration and Tito Mboweni as minister of finance is to get a grip on the civil service remuneration bill.”

This year’s public sector wage settlement came in at R30 billion more than what was budgeted for. Ramaphosa pledged after the recent Jobs Summit that there’d be no retrenchment of government employees.

Mboweni must now show the way forward while risking a major clash with labour unions.

MTBPS HOPES

Cosatu wants unemployment to be prioritised in Mboweni’s statement.

The trade union's Bheki Ntshalintshali says: “We don’t expect him to come up with new policies. Of course, the minister is the captain in that ship and will be able to give direction."

At the same time, Agri SA’s Requier Wait has called for Mboweni to support farmers as they deal with the consequences of the recent drought.

“It’s important to remember that the impact of the drought is not only short-term. It can take up to three years to recover from specific incidents of drought. Even though some areas have had some relief, the impact is still felt. We’re hoping for some relief with this.”

(Edited by Shimoney Regter)