Political parties reject Enoch Godongwana’s budget plan

Sisanda Mbolekwa Politics reporter
Finance minister Enoch Godongwana.
Finance minister Enoch Godongwana.
Image: Reuters/Shelley Christians Jordaan

Finance minister Enoch Godongwana presented his mid-term budget plan in parliament today, with political parties criticising his fiscal approach.

The DA rejected his plan, saying it is another indication that government has no effective plan to accelerate economic growth, resolve relentless blackouts, stabilise debt, reign in runaway expenditure, support vulnerable South Africans and combat corruption.

The DA’s Dion George said they noted the minister’s announcement of government’s plan to accelerate private-public partnerships to rebuild South Africa’s crumbling infrastructure. Despite it being late, the DA said it supports this initiative and has already made proposals to implement this model.

However, they say this is where the good news ends.

“Although government claims to be making significant progress in resolving relentless blackouts, the lights remain off, and government commitment to unbundling Eskom is not moving fast enough, while the entity continues to generate enormous losses.

“Tepid economic growth is projected to continue with the result that revenue projections remain overstated, and government was therefore forced to cut expenditure on service delivery and social spending in the absence of any bold initiatives. This means that department budgets will need to be cut further if government wants to avoid running out of money.”

George said the minister had no alternative to increased borrowing and has delayed debt stabilisation yet again — as a consequence of slow economic growth and the irresponsible takeover of state-owned enterprises (SOEs) and municipal debt to Eskom.

“We further note with concern that 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.

“This situation is not dissimilar to Eskom, reflecting an inability to repay its debt and the need to borrow more to remain barely operational. A better solution would be to accelerate Transnet’s privatisation.”

Despite the president’s commitment in his 2023 state of the nation address to restructure the size of the state, the DA lamented that this is not reflected in the numbers, citing that the public sector wage bill continues to balloon unsustainably.

“This mid-term budget speech was confirmation that government simply does not care about the plight of battling South African households who are unable to put enough food on their tables — with no mention of the so-called food security plan of action to protect consumers from the burden of skyrocketing food prices.

“The minister could easily have expanded the zero-VAT rated basket of food to bring immediate relief to South African households. He could also have reduced taxes and levies on fuel which would have provided further relief.”

The official opposition party noted the extension of the social relief of distress (SRD) grant for another year in the absence of any policy decision or funding solution over the medium term.

Meanwhile, the IFP expressed deep concern at the state of the nation and the continued mismanagement of our economy by the ruling party, citing there was nothing to celebrate in the budget statement.

“The future of our beloved country is looking bleak, with an economic outlook that offers little hope. The issues of escalating debt, the ever-increasing cost to service this debt, and the alarming debt-to-GDP ratio are alarming signs of a government failing in its fiscal responsibilities,” said the IFP leader Velenkosini Hlabisa.

He said the government recently highlighted that the state continues to borrow money, therefore “digging our country into a debt hole”.

“In his address, minister Godongwana failed to address one of the most pressing issues facing our nation — job creation. South Africa’s unemployment crisis continues to worsen, and we have heard nothing concrete from the ANC-led government on how they plan to create jobs for our struggling citizens.”

Hlabisa slammed the expansion of the presidential stimulus programme, criticising it for not being a genuine source of job opportunities but merely a political tick-box exercise and simply placing a Band-Aid on a larger problem.

“We are not surprised that the mid-term budget policy statement appears to be yet another empty promise by a government that has consistently failed to deliver on its commitments. South Africans are not lazy to work, they need a hand-up and not a handout. The ANC-led government has lost the trust of the people, and we, the IFP, share in the disappointment felt by millions of South Africans.”

The EFF rejected with contempt what they called the irrational, reckless, and underwhelming statement.

“We reject the proposed cuts of direct provincial conditional grants of R6.2bn, which include the conditional grant of poverty relief and infrastructure development, early childhood development grant, education infrastructure grant, and other grants meant for much-needed social infrastructure. Furthermore, these budget cuts are extended to municipalities wherein the conditional grants budget is cut by R3.4bn.

“The majority of municipalities in South Africa, including metropolitan municipalities capable of collecting revenue, are in financial stress. These cuts are aimed at conditional grants for upgrading informal settlements, improving public transport infrastructure, and other essential infrastructure.”

The red berets said it was clear that National Treasury is “choosing to fold its arms and watch as municipalities fail, to further the agenda of austerity. These budget cuts are, therefore, nonsensical, senseless, and must be rejected.

“We maintain 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. The only way to stabilise South Africa’s government debt is to grow the economy.

“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 — which is evident in the reference to the national development plan that has now been reduced to a joke.

“Additionally, the finance minister continues to demonstrate that the so-called Eskom debt relief is nothing but an IMF-style structural adjustment of Eskom that seeks to impose privatisation.

“The finance minister is even going as far as threatening Eskom that if they don’t follow the conditions, which include not spending any of the relief on new generation, the relief will not be converted into equity.”

The EFF said 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 that target poor households and SMMEs.

“We additionally note the allocation of R34bn to extend the Covid-19 social relief of distress grant. However, the National Treasury refuses to come up with a concrete and permanent solution to address the gap of millions of our people who do not have any means to earn an income, including income to survive on a daily basis.

“The R350 Covid-19 grant was acceptable during the hard lockdown, but it is now unsustainable as a long-term solution. South Africa needs a comprehensive and sustainable safety net, including a grant for unemployed graduates.”

The red berets said the fiscal policy under the ANC government is directed towards the decapitation of the state and strategic assets, instead of using it as an instrument for meaningful economic transformation and industrialisation, particularly the procurement budget.

“The mid-term budget policy statement reads like a private sector manifesto crafted in Sandton by a group of CEOs, while the new director-general of the National Treasury takes notes.

“As a result, the EFF rejects the proposed budget statement and adjustment budget and will mobilise society to participate actively to ensure that it is rejected by all and is not adopted by parliament. 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.”


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