Faizel Patel – 24/06/2020
Economist and Director at the Efficient Group Dawie Roodt has told Radio Islam Finance Minister Tito Mboweni presented an exceptionally brave budget by dramatically cutting back on nominal state spending so that he can spend less this year than in 2021.
Mboweni delivered his supplementary Budget speech in Parliament on Wednesday
The minister says the projected total consolidated Budget spending, including debt service costs, would exceed R2 trillion for the first time ever.
Roodt says Mboweni will be raising more than a just few eyebrows on his decision to cut state spending.
He says Mboweni’s tabled budget may lead to serious confrontations with a number his colleagues including Public Enterprises Minister Pravin Gordhan, the African National Congress (ANC), their main ally the Congress of South African Trade Unions (Cosatu) and even President Cyril Ramaphosa.
“By making that announcement and by actually putting that on paper the way he has, inevitably will put him in confrontation with a number of forces. Essentially, he’s decided to confront the Minister of State Owned Enterprises Pravin Gordhan because Pravin Gordhan wants to keep on saving South African Airways as an example. In fact he said, some state owned enterprises can go under.”
Roodt says the country is in a deep financial crisis and it will remain in this position for a long time.
“Without a doubt. In fact, we have been in deep financial trouble before the virus and I read all over the place and when I read through the documents it’s the virus this and that. Nonsense that’s not true of course. The reality is that the state’s finances were mismanaged before the time and that’s the reason why we are where we are today. We should have been able to support the economy, we can’t do that because of the mismanagement of the fiscal accounts beforehand and now we are even deeper trouble.”
Roodt says the state debt levels has also gotten completely out of hand with South Africa borrowing far too much money.
Listen to the interview with Dawie Roodt