Mid-Term Budget 2020 … Epic Fail

Mid-Term Budget ZERO

On 28 October 2020, Minister of Finance and former Reserve Bank Governor Tito Mboweni presented South Africa’s Mid-Term Budget, a task that faced endless challenges mainly due to the impact of the current pandemic, but must be declared as an epic failure!

We can accept the fact that Minister Mboweni had to present figures telling a dire fiscal story. We can also appreciate anything that comes out of it as workable due to the persisting financial constraints.

But what we cannot accept is that the once brilliant and loyal Tito Mboweni had now succumbed to the dark side of the force…..the only thing missing were the black helmet and hissing sounds.

It is a fact that the South African economy will shrink by 7.8% this year and it is solely caused by the impact of COVID-19 and the government’s measures during the lockdown. But while the international impact of the pandemic could not have been avoided, Mboweni should have made clear that the major part of the negative fiscal consequences is owed to the incompetent and ignorant policy decisions during lockdown, which hurt the economy harder than necessary.

It is almost hypocritical of Mboweni to cry over the reduced revenue streams while knowing very well that those figures could have been better if the self-appointed COVID GODS masked as “Crisis Councils” and “Disaster Managers” would have refrained from Tobacco, e-Cigarette and Liquor Bans or from preventing restaurants to prepare food for takeaway during the early lockdown stages.

The mid-term budget sees planned reductions of the national government wage bill, but we all know that those cuts will not happen where the unnecessary fat sits (Parliament, Leadership, Ministers, Governors) but will happen by reducing staff in the floors of anyway understaffed service delivery departments.

Mboweni projects further an absolute unrealistic narrowing of the consolidated GDP deficit and stabilisation of national debt at a level of 95% while government is spending and creating further debts on a daily basis. Where does he find any facts or future developments that support his projections?

The pace of recovery of the South African economy is one of the most difficult developments to predict as long as the pandemic has its evil grip tightening around the globe. Is he thinking that we are immune against a second wave that exceeds in Europe in numbers of infections and fatalities even the first wave? Where is really room for curbing government spending on ages or does he think policemen, nurses and teachers can bleed even more?

Finally, and that confirms any suspicion of his turning into just another member of the corrupt leadership, the brake on government spending is ridiculed and made obsolete when ZAR 10.5bn again – and in addition to the ZAR 16.4bn allocated in February’s Budget – go  towards a “New SAA”, a lame duck that should not fly and which will use and abuse the funds to continue funding an incompetent as much as greedy executive management. And what about the financial support required by all other ailing public companies? Who draws the line? Where shall that come from….Minister Mboweni, you missed to address that!

Let’s face it:

The predicted Average GDP Growth of 2.1% over the mid-term is a fairy tale as it is based only on factors that can neither be controlled nor predicted.

Cutting Government Spending by ZAR 300bn is a dream, that’s all. The reality is a nightmare dominated by the persisting scenarios of increased debt services (with each downgrade loans become more expensive) and an endless string of little black holes representing the public enterprises and the municipalities, who are already bankrupt and struggling even to pay wages.

Increasing Tax Revenue by ZAR 40bn over the next three years is in itself a joke as a) the demand is much higher and b) this could have been collected already in only 6 months if the NCCC Lunatics would not have banned tobacco and alcohol sales.

Bolstered Tax Collection to increase to 1.5 trillion he says. How? While over 90% of the population are still feeling “entitled” not to pay taxes? By pushing for tax collections at empty ports that are awaiting imports that nobody can afford anymore? Or are we back to your predecessors’ dirty tricks to deny VAT Returns and loose applications for tax rebates and the recognition of tax-relevant losses?

And here comes the joke of the day: The main budget will show a surplus by 2025! Sure! And Mickey Mouse will be president while world peace has set us free….. I would like some of the stuff he was smoking when preparing this part of the policy statement. Trevor Manuel’s times are over, my dear Minister, the last honest members of government have left the building….

Minister Mboweni presented a Plan that is no Plan. It is a heap of speculations, unfounded and politically motivated but without any credibility. He had the chance to come clean, cap-in-hands, to make clear for everybody that we are in a state of flux or even purgatory and that we are not masters of our own affairs. The pandemic and its effect on our trading partners will dictate a new economic world order and we sit at the receiving end. For what it’s worth and what can be done at home, the lip service of the Finance Minister is a waste of hot air while a corrupt and incompetent leadership continues to loot state coffers for personal gain and fail to address the crisis of mal-administration and misappropriation that is now daily practice across all departmental boards.

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