30 OCT 2020
Growth plan and structural reforms need to be implemented
While the difficulties and dilemmas facing Finance Minister Mboweni in the latest MTBPS must be acknowledged, the credibility of the latest fiscal framework will now largely rest on the extent to which the growth plan and other structural reforms are actively implemented and deliver a better economic performance. This means that implementation is a collective Cabinet responsibility and cannot rest on the shoulders of the National Treasury only. The credibility factor in fiscal policy now assumes great importance because of the previous poor track record of not meeting fiscal and growth targets.
It is noteworthy that, although Minister Mboweni in this MTBPS seems to draw a fiscal ‘line in the sand’, the debt ceiling is now further raised and extended over five years. The choices being made around the financing and restructuring of SOEs like SAA also do not seem to be supportive of a growth-oriented strategy. Although the problem of the excessive public wage bill is recognised, the solutions remain open-ended and uncertain. Stricter timelines are needed all round. On the positive side the emphasis on infrastructural spending and the progress being made with zero-budgeting are key steps in the right direction.
But overall, with public debt strongly rising and funds often being diverted into what seem to be low-return projects, it is not evident that the MTBPS in itself will be able to lead job-rich growth in pro-active way. Several of the practical steps in the official growth plan, together with other structural reforms, should now be visibly implemented to strengthen business confidence. The private sector needs greater encouragement and a more investor-friendly environment is required to boost growth. For the present a stable macroeconomic outlook for SA is still elusive.
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