THE ROAD to recovery must begin now, said the minister. The future should be bright and sweet. But for now, South Africans must be ready to take the bitter medicine!
Finance Minister Tito Mboweni said because of the Eskom crisis, South Africa will have to borrow billions.
“We are borrowing R1,2 billion a day, assuming that we don’t borrow money on the weekend,” he said. “This coming year, interest expenditure will be R209,4 billion. This is R1 billion a day,” he said.
He said South Africans must be prepared to take the bitter with the sweet. Referring to an aloe plant he had on the podium, he said: “The aloe has a long history of medicinal use. It is resilient, sturdy and drought resistant. We must take the bitter with the sweet. Today, I bring you a seed to prove that if we plant anew we can return to plum times.”
Mboweni said the country will struggle to be financially stable in the next three years. The minister said some tax changes will be proposed that will bring in a further R15 billion in this financial year. Mboweni highlighted six points which he said the country needed to achieve a higher rate of economic growth, including improving its tax collection, managing government spending, stabilising and reducing debt and changing the way state-owned enterprises operated.
The public sector bill, which has ballooned in recent years, has been blamed for excessive government spending, triggering calls for President Cyril Ramaphosa to trim his Cabinet.
“The public wage bill is unsustainable. We must shift expenditure to investment,” he said. “It will not be easy, but our nation is ready for renewal. We are ready to plant the seeds of our future.”
As expected, sin tax went up but the good news for grant recipients is that their monthly payouts have increased. He said a chief reorganisation officer will be jointly appointed by him and Public Enterprises Minister Pravin Gordhan at Eskom.
“Pouring money directly into Eskom is like pouring water into a sieve,” he said.
He said the revenue shortfall was caused, in part, by problems with tax administration at Sars.
“Improving collections hinges on restoring the efficiency of Sars. In the short term such improvements may be more effective than further substantial tax increases.”
Speaking to journalists before the budget speech he said the world is in an era where massive state-owned enterprises were no longer the order of the day.