Why Tito Mboweni's 2019 Budget speech will be South Africa's toughest yet
Tito Mboweni will deliver his own maiden Budget speech today, with plans to steer Eskom out of crisis expected to take centre-stage.
CAPE TOWN - When former Finance Minister Malusi Gigaba delivered his first – and last - national Budget speech, he quoted US rapper Kendrick Lamar’s song, Alright.
"We gon' be right, we gon' be alright," Gigaba rhymed.
Gigaba’s "tough, but hopeful" Budget revealed a more than R48 billion revenue shortfall due to the South African Revenue Services (Sars)'s failure to meet collection targets, thanks to a faltering economy and the now sacked commissioner, Tom Moyane’s mismanagement.
He had the unpleasant task of hiking VAT from 14% to 15% – the first in SA’s democratic history – sparking the fury of unions and the opposition.
That was necessary to fill a fiscal hole made much deeper by former President Jacob Zuma’s bombshell announcement of fee-free higher education: R57 billion was set aside to cover that for three years.
There was a little relief for some taxpayers, but fuel levies rose by 52 cents a litre, setting the stage for more pain when the rising cost of oil drove up prices at the pump, hitting consumers hard.
More worrying was the government’s spiraling debt and the soaring cost of servicing it.
Less than a week after his debut, Gigaba was replaced by Nhlanhla Nene in President Cyril Ramaphosa’s first Cabinet shake-up. By October, Nene had stepped down and it was up to former SA Reserve Bank governor Tito Mboweni to deliver the mid-term Budget review.
“South Africa is at a crossroads,” Mboweni said.
The growth forecast was slashed by half, from 1.5% to a paltry 0.7%.
Mboweni spoke of difficult choices, including a "hard look" at SOEs and the government’s ever-increasing salary bill, after last year’s wage agreement blew February Budget targets by R30bn.
Today, Mboweni will deliver his own maiden Budget speech.
Economist Iraj Abedian, of Pan-African Investment and Research Services, says the only good news we can expect is that "there will be no more bad news".
Eskom, responsible for producing 95% of the country’s electricity, is mired in debt and inefficiencies. Recent days of load-shedding have left the economy reeling - and the 96-year-old giant parastatal is now considered a threat to national security, because if it crashes and burns, so does the economy.
Plans to steer it out of crisis will take centre-stage in Mboweni’s speech today. Whatever package he unveils, every South African will be footing the bill.
Just twelve months down the line since Gigaba channeled Kendrick Lamar, we’re clearly not "alright".