Cosatu, academic cautiously optimistic about Mboweni’s budget

Against the backdrop of declining economic growth, the Congress of South African Trade Unions (Cosatu) and an academic were yesterday cautiously optimistic about the budget speech to be delivered tomorrow by Finance Minister Tito Mboweni in contrast with the pessimism of economists.

While awaiting Mboweni’s budget “with great expectations”, Cosatu spokesperson Sizwe Pamla cautioned: “This budget comes at a time when state-owned enterprises (SOEs) are under strain as total cost production outstrips actual revenue, requiring billions in bailouts from the government to remain afloat – straining an already overstretched fiscus.”

University of Stellenbosch economics professor Andre Roux said if Mboweni got his way “we can expect him to table a necessarily restrictive and largely unpopular budget speech”.

“It would be politically untenable to turn a blind eye to the very real predicament facing millions of South Africans: poverty, unemployment and disillusionment. The notion of reducing government outlays on, for instance, education, social grants and healthcare, is in the circumstances, a ludicrous one.

“The simple budget arithmetic and the underlying conditions and unrealistic expectations are incompatible with one another. Things will first have to get worse for a while before they get better,” said Roux. “But if the right strategic decisions are made with conviction, clarity of purpose and intent, 2020 might just be the year in which the seeds of a moderate recovery are planted.”

In “a deficit nation”, Roux expected Mboweni’s budget speech to “come in for a great deal of criticism from both friend and foe”.

“In addition to the external forces, over which we have no control or influence, the finance minister also has to contend with a number of self-imposed obstacles to growth and development,” warned Roux.

During the Institute of Race Relations panel discussion for the launch of #YourBudget campaign in Johannesburg, economists Dawie Roodt of Efficient Group, Wits University economics senior lecturer Lumkile Mondi and financial commentator Magnus Heystek painted a bleak picture of the country’s future.

Asked about the anti-austerity movement, Roodt said: “The longer we wait, the more pain we are likely to experience. Whether we do it or not, markets will force us. Should we not cut jobs at state-owned enterprises like Eskom, we risk a downward spiral.”

On whether Mboweni has any room to manoeuvre in deviating from President Cyril Ramaphosa’s recent State of the Nation address (Sona), when tabling his budget, Mondi responded: “Not a chance. He has no choice but to go along with Sona. He also cannot make any moves when the economy is in such a state.”

Referring to expropriation of land without compensation Heystek warned: “The ANC and Cosatu are planning to extract wealth from haves to have-nots through land and pension funds.

“However this is dressed up, it will certainly lead to less growth of pensions and the economy.”

– brians@citizen.co.za

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