Nkosikhulule Nyembezi
The ANC’s nerves are jangling in advance of the most significant event since the election as Finance Minister Enoch Godongwana prepares to table the Medium-Term Budget Policy Statement (MTBPS) in Parliament on October 30.
Many expect to see tangible policy priority commitments for the next three years and beyond.
I have now heard so many people say that Godongwana’s looming budget is a “show and tell” event on who is in charge of what in the Government of National Unity that I have given up counting.
Whether or not it will deserve such hyperbolic billing, the first GNU budget is indeed one of the most significant moments since the election, both for the minister’s reputation and the standing of the government as a whole, considering that there are many inter-party and intra-party opponents of the working relationship between the ANC and the DA.
When Godongwana gets up before Parliament, he will do so accompanied by a great weight of expectation that his choices will capitalise on the low-hanging fruit by speedily correcting many things managed abysmally poorly in South Africa under the previous administrations.
As this will be a milestone budget policy statement with several big jobs to do, it should go beyond rhetoric, such as that displayed in Cyril Ramaphosa’s State of the Nation Address and his address to the UN last month. Its practicality will be hugely important.
It should build on the honeymoon period of broadly positive domestic sentiment, relatively benign economic news and (albeit cautious) investor optimism by setting the course for the rest of the five-year term of this administration.
The first is to clear the decks of the dire fiscal decline and deterioration left by the previous administration’s legacy. It should show leadership in improving South Africa’s debt-to-GDP ratio, which has almost doubled since 2012 to more than 70%, with debt-service costs now consuming more than 20% of government revenue. Managing debt will be crucial for the government’s ability to invest in education, healthcare, and job-creating infrastructure projects.
The second is to do what he can for dilapidated public services, including addressing socio-economic challenges such as poverty and inequality.
The third challenge, the most critical for the long term, is to change the arc of South Africa’s story by putting the country on a trajectory towards higher economic growth, including new measures to attract private investment and support public-private partnerships to help fund essential projects. No pressure then, minister.
Deliver the budget policy statement priorities well, and Godongwana will settle nerves about the economy and give the unity government a clearer sense of direction while drawing a line under a critical period dominated by the debilitating suspicions and attacks on the policy cohesiveness of this administration.
Deliver the budget policy statement priorities poorly, and the cracks in the ANC-SACP-Cosatu alliance we have seen in recent weeks following the tabling of departmental budget votes will get more dangerous. Every budget policy statement has a lot of risks to it as it also covers an election period – and this one is a huge milestone in that regard.
The interminably long build-up to the event stems from the minister ordering budget cuts before he did anything else, arm-wrestling between the Treasury and spending ministers over departmental funding shortfalls highlighted during the budget votes, and the time needed to mark the Godongwana’s maths.
Politics abhors a vacuum, especially in a unity government where ministers are obsessed with proving their worth after their first 100 days in office.
The build-up period has been filled with endless rumour-mongering about whether there is one unity government or many parallel government ministries under the ANC and the DA.
The appetite for speculation among journalists has been fuelled by hints and winks, nudges and steers from ministers and their aides about what might be coming, especially as the Public Works Department (under the DA’s Dean MacPherson), the Public Service and Administration Department (under the IFP’s Mzamo Buthelezi), and Sports, Arts and Culture (under the PA’s Gayton McKenzie) have started cutting back on gravy train expenses inherited from the previous administration.
The media has been straining to curdle the blood of affluent South Africans and large businesses by telling them that Godongwana will squeeze their pips until they squeak by raising or introducing new taxes.
The EFF and the MK party are itching for an “I told you so” moment when they can claim vindication for their pre-election warnings that the ANC would hike taxes.
Godongwana will be entitled to puncture their hypocritical posturing by reminding everyone about the collective ownership of the process by the various parties in the unity government and, therefore, the high prospects of success of the different aspects of his budget policy statement.
The country recorded a primary budget surplus – where revenue exceeds non-interest expenditure – for the first time in 15 years in the first quarter to March 2024, raising hopes that debt stabilisation might be in reach.
There is scope for argument about the precise size of the “black hole” bequeathed by the previous administrations at national, provincial, and local levels. However, there is a debate about whether it is gigantic or merely enormous.
The unquiet ghosts of South Africa’s downgrade by international agencies, rising public wage bills, dilapidated infrastructure, and power blackouts –authors of the disastrous economic meltdown of three years ago – still haunt the corridors of the Union Buildings.
A repeat of that catastrophe due to a lack of government policy and implementation cohesion will be career-destroying for Godongwana and some of his ANC colleagues responsible for key economic cluster departments. “Wasteful spending spree” is not the headline he seeks to generate.
So, my hunch is that Godongwana will be relatively cautious about how far he relaxes the rules on expenditure.
While keeping a wary eye on the bond market and the public mood, he must watch out for dissent from within the Cabinet.
* Nyembezi is a policy analyst, researcher and human rights activist
Cape Times