Budget ‘pain will hit us after election’

The budget speech delivered by Finance Minister Tito Mboweni yesterday was “election-friendly” and South Africans can expect a marked difference in the mid-term budget, which will be delivered later this year, after the May elections.

Mboweni’s speech drew mixed reactions, with several economists agreeing the measures taken towards fixing Eskom were a favourable step.

Mboweni said yesterday the embattled power utility would be receiving assistance of R23 billion a year for the following three years.

But the financial assistance to Eskom, which had asked government to take over its R100 billion debt, was on condition that an independent chief reorganisation officer (CRO) was appointed to oversee the rescue.

Economist Deward Serfontein said he was “less depressed” than he was before he heard the speech and that it seemed like an “election-friendly” budget speech, with the real one still to come after the elections.

“The utility is just simply too big to fail. If it goes down we go down with it,” Serfontein said. “They have just confirmed they will not take on the Eskom debt, though they will be helping them out.

“It is good that they are not bailing them out but we don’t have the details yet. We don’t know how long this will be for.

“We also do not know how they will be selecting the CRO. Right now, we do not have an action plan and it is still a waiting game. But, for now, my reaction to the speech is that I feel relieved.”

Serfontein said some of the things mentioned were exciting, but he wondered if it was election-driven.

“It’s exciting that he announced that they would not be bailing Eskom out, but one has to wonder whether they are saying all of this because the elections are right around the corner.

“There is no real clarity on what’s next and I can’t see a real action plan without people losing their jobs. For now, it is a waiting game and we will see the real restructuring plan post-elections.”

Democratic Alliance leader Mmusi Maimane called the budget a “lipstick budget”.

“You can talk about education, but he is taking money away from provinces whose competence is to deliver education. This was a lipstick budget: he made it look pretty on the outside but it has dealt with nothing,” said Maimane.

Another economist, Dennis Dyke, said it was a “very negative speech because we had to deal with a very negative problem”.

“In the short term, they have to give SOEs extra cash and or increase tariffs. But you have to make sure that if you give them the money, they will not make the same mistakes as before. So this restructuring plan is essential to get discipline back into Eskom. A lot of work needs to be done in Eskom, we have to assess if the Kusile [power station] should still go ahead, because it just seems like a lot of money is just pouring down a deep, deep hole.”

INFO

Jobs are safe – Mashatile

• ANC treasurer Paul Mashatile said Mboweni’s budget came at a time when the country was going through trying times and that the ANC was happy about increased spending – particular on infrastructure, education and health.
• “Infrastructure spend will help us grow the economy and create jobs, ” he said.
• Mashatile also addressed growing concerns on possible job losses in the unbundling of Eskom, saying they were having continuous engagements with trade unions.
• “We told the unions unbundling is not about privatisation and we will ensure that there is no massive job losses. Unbundling is necessary because Eskom in its current form is not sustainable,” he said. – Sipho Mabena

– jenniffero@citizen.co.za; Additional reporting by ANA

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