On 1 November 2023 I flew to Cape Town and watched Finance Minister Enoch Godongwana selivering the Medium Term Budget Policy Statement (“MTBPS”) and the only reaction to it that surprised me was the missing one from the rating agency Moody’s that did not change the outlook for South Africa and let it remain rated as “stable.
In none of the universes I visited would a country have a stable outlook where cluelessness combined with reckless debt creation while awarding SOCs wasting of billions of rands of public funds guide the fiscal future of South Africa’s economy.
In any, virtually ANY company around the country and the world (maybe excluding Takealot), after realising that revenue has shrunken by R 57bn, starts making plans to cut expenditures and does not throw billions of Rand into the SOC Galaxy full of black holes or raises salaries by 7.5% creating over 50 000 public servant employees earning more than 1 million rand annually.
Financially battered households and businesses still trying to recover from a failed COVID protection policy need assistance and encouragement by sharing signs of hope and not hopelessly watching state funds being wasted with no effect while being told that tax rate hikes are on the cards and no effort is made by SARB Governor Lesetja Kganyago to lower interest rates, just because he ”feels” there “could maybe” coming along factors that “might” have a negative influence on the inflation rate.
Increasing the tax collection efficiency, and that means not increasing thumb screws on those 5% taxpayers actually paying their dues, but rather extending the existing base into all regions of business and society that have never paid taxes although they should have.
Godongwana was silent on the most important facts as we learned nothing of the “real state of affairs” of the country and any projections on how to increase revenue or where we are going with job creation despite any efforts of Home Affairs thwarting job-creating investments by withholding necessary visa and permits or DIRCO and the Presidency making statement in the context of Ukraine, Israel and Palestine that border on the deliberate assassination of any foreign affair or relationship that is needed to attract significant FDI.
On top of it the detrimental weather patterns drive food prices, national health insurers increase treatment costs well above inflation, the rand remains on its weak levels and there is a big question mark behind the development of the international oil price given the tensions and fall-outs around Israel and Palestine with Hezbollah having joined the quarrels.
IN SUMMARY, the Mid Term Budget was more warm air than El Niño ever brought to my areas, and until the Budget Speech in February 2024, the treasury and the honourable Minister as well as the SARB Government are well-advised to look at scenarios of revenue dropping below R 1.8tr, economic growth slowing further below 0.8%, foreign investors being further alienated by xenophobic policies while commodity prices continue to drop.
South Africa needs action, not contemplation, it needs its leadership to take risks and to start making unpopular decisions and those decisions are surely not increasing the VAT rate or stuffing more fiscal holes of ailing SOCs.
Squawk! Buck Up “Leaders”!