When budget deficits more than double to 16%, without government cutting expenditure somewhere, it is time to restructure the state, not the economy.
So says Piet le Roux, CEO of independent business group Sakeliga in reaction to the emergency budget presented in Parliament today by Minister Tito Mboweni.
“Contrary to President Cyril Ramaphosa’s insistence last week that Covid19 presents an opportunity to transform and restructure the economy, it necessitates the restructuring of the state. That is where his focus should be, but this emergency budget shows no evidence of such realisation.”
“In fact, the emergency budget doubles down on debt and wishful assumptions about future tax base recoveries. It projects almost four times as great a deficit for 2021 as Mr Gigaba did in 2018, and double what Mr Mboweni did in February – suggesting an accelerating fiscal deterioration even long after the presidency of Mr Zuma.”
“Add to these any number of further red flags – Mr Ramaphosa’s insistence that BEE is here to stay, the race quotas affirmed by courts, the expansion of SOEs and public employment, the sectoral masterplans, or the encroachments on the Reserve Bank – and mix it with ANC’s record of public administration and the state’s future presents itself.”
“Reflecting upon the state’s slim prospects for reform, we consider it incumbent upon organised business groups to chart an alternative course. As organised business our agenda should crucially include the following: compensating for state failure at infrastructure locally and nationally; the ability to operate in absence of any state-support; and state-proofing wealth, business, and employment for ourselves, our clients and customers, and all communities wherever we operate.”
“Perhaps we have had the roles reversed for too long: in the final analysis it might not be the state’s responsibility to create a favourable environment for business, but that of organised business itself. This separation of powers – this paradigm shift – is the economic restructuring South Africa is crying out for, for the benefit of all. It is easier said than done, but it is what needs to be done.”
The budget in two charts: