“Mboweni’s most important job was to present a roadmap to a smaller deficit – but he has failed to do so.” This according to Piet le Roux, CEO of Sakeliga. Finance Minister Tito Mboweni delivered his first budget speech on Wednesday, 24 October 2018.
Le Roux continued: “The fact of the matter is that the fiscus is slipping further into the red at an alarming pace. For the past decade, spending has annually exceeded income by between R100 billion and R250 billion. To start consolidating the fiscal position, the deficit will have to be reduced to less than R100 billion per year. Mboweni has given no indication that he is willing to make the difficult decisions necessary to achieve this reduction.”
Le Roux notes that, for this speech, Mboweni probably had little to no effect on the medium-term budget itself. “He has been in the chair for no more than two weeks, so he would not have been able to do much with the numbers themselves. He would, for instance, not easily have been able to adjust the state’s wage bill downwards, but he has, at least, attempted to keep its expansion within bounds. That being said, it is unfortunate to note that further bailouts for SAA, SA Express and the Post Office have been provided for – and Mboweni has, in this instance, done the exact same thing as his predecessors.”
Le Roux expressed his relief at Mboweni’s apparent decision to soften some of his more controversial policy preferences. “It is encouraging to see that Mboweni refrained from mentioning plans dealing with, for instance, a state bank, sovereign wealth fund and 40% state ownership of mines.”
“Judging from his first budget speech, there is, unfortunately, little reason to believe that Minister Tito Mboweni currently has the necessary vision to accomplish fiscal consolidation,” Le Roux concluded.