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How will Mboweni turn around a persistently weak economy, escalating debt to GDP ratio and the highest unemployment rate since 2008 in the midst of an ongoing pandemic?
Finance Minister Tito Mboweni will be facing one of the toughest juggling acts of his career when he delivers the 2021 Budget Speech on Wednesday afternoon at 2pm.
He is expected to deliver a budget which address a persistently weak economy, escalating debt to GDP ratio and the highest unemployment rate since 2008.
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He also has to deal with the contributing stumbling blocks presented by the Covid-19 pandemic and the fallout of South Africa’s year-long lockdown.
Mboweni has a tough challenge ahead in turning around a South African economy which has been on a steady downward trajectory for several years:
- Under Nelson Mandela, the average annual growth of gross domestic product was 2.7%. Unemployment was 25% and government debt (including that inherited from the apartheid era) was 48% of GDP.
- Under Mbeki, GDP growth averaged 4.1% annually. Unemployment went down to 23.7%, as did debt, to 44.5% of GDP (including apartheid debt).
- In the Jacob Zuma era from 2008 to 2017, annual average GDP growth shrank to 1.7%, while unemployment rose to 26.7% and debt spiraled to 62.2% of GDP.
- Under Cyril Ramaphosa, GDP growth (after Covid-19 in the third quarter of 2020) was just 0.2%, while unemployment rose further, to 32.5% (third quarter 2020 after lockdowns), while debt increased to 63.3% of GDP.
How the finance minister hopes to turn the tide is anyone’s guess.
