If you haven’t heard by now, Finance Minister Tito Mboweni delivered the mid-term budget speech on Wednesday 28 October 2020. While some members in the Parliamentary gallery cheered and clapped as he announced certain allocations, others have expressed deep disappointment.
While the Democratic Alliance (DA) feel that South Africans were “thrown under the plane” to pay for South African Airways (SAA) after Mboweni announced an allocation of R10.5 billion, the FF Plus feel that Mboweni is just “rearranging the deck chairs on the Titanic”.
HIGHLIGHTS OF MBOWENI’S MID-TERM BUDGET SPEECH
Here are some of the main highlights of Mboweni’s speech:
- According to Mboweni, the economy is now expected to contract by 7.8% this year, and the 2021 outlook is more uncertain;
- The stock of gross debt will rise from roughly R4 trillion to R5.5 trillion in 2023/2024;
- Cabinet decided to extend the social relief of distress grant to the end of January 2021;
- R1 billion was also allocated for food relief to fight hunger;
- R12.6 billion has been allocated to the employment initiatives championed by President Cyril Ramaphosa;
- Government is borrowing at a rate of R2.1 billion per day;
- Mboweni also announced that R10.5 billion has been allocated to SAA to implement the business rescue plan; and
- Mboweni said the State Capture Commission of Inquiry has been allocated an additional R63 million from the Department of Justice and Constitutional Development to finalise investigations and produce a close-out report.
HERE’S WHAT THE DA HAD TO SAY
DA Shadow Minister of Finance Geordin Hill-Lewis said the African National Congress (ANC) government has chosen to cut essential services to the public – like education and policing – to fund another bailout of SAA.
“This is an indefensible, immoral choice. It amounts to throwing South Africans ‘under the plane’ to pay for SAA,” said Geordin Hill-Lewis.
Geordin Hill-Lewis said that in summary, Mboweni has abandoned his commitment to get debt under control by 2023 and has abandoned his commitment to stop bailouts of SAA.
“South Africans will continue to pay for a zombie state company, and will continue to suffer the consequences of ever-higher debt. That is why today’s Medium Term Budget Speech must be considered a failure,” he said.
He went on to say that the R10.5 billion used for SAA could have been used for one month of additional TERS, 440 new community clinics, 66 500 new RDP houses, 130 new schools, and 80 000 new teaching degrees, or 27 000 new medical graduates.
“The granting of another R10.5 billion bailout to SAA, on top of R16.4 billion allocated in February’s main budget, shows the ANC’s disregard for poor South Africans,” he said.
FF PLUS SLAMS MBOWENI
FF Plus leader Pieter Groenewald said the reality behind Minister Tito Mboweni’s medium-term budget is that the fiscus does not have any money left.
“The minister has his back against the wall and yet he still allocates R10.5 billion, which should have gone to local government, to the SAA as an umpteenth lifeline, despite the fact that municipal services across the country are terrible. People do not have access to water and there are sanitation problems everywhere,” said Groenewald.
He also said the government’s wage bill remains an enormous problem.
“In this regard, the Minister has opted to take R14.1 billion from education, but President Cyril Ramaphosa announced a mere two weeks ago that 200 000 new positions will be created in the educational sector,” he said.
“It just does not make any sense. Where will the money come from to create the additional positions that the President promised as part of his job-creation programme?” he added.
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