It’s Day 106 for save novel finance minister Enoch Godongwana. He says there might be itsy-bitsy in recently’s Medium Term Budget Policy Assertion that wouldn’t had been in it, had his famously sartorially inelegant predecessor Tito Mboweni serene been within the put up. “The entirely alternate you’ll look between Tito and I are shoes…” And, one presumes, his hat.
That message is certain to net some comfort to an investment neighborhood which is cautious in regards to the credentials of president Cyril Ramaphosa’s novel finance chief. Easiest time will expose whether or now no longer that caution is suitable. But so a long way so true.
Within the click convention to “locked up” journalists sooner than his maiden Medium-Term Budget Policy Assertion, Godongwana seemed relaxed but confident. Handiest of all, he didn’t wager, nor are attempting to cowl lack of knowledge thru verbiage devour unlamented predecessor Malusi Gigaba.
When the novel finance minister wasn’t determined, he passed the ball on to a colleague, including SARB governor Lesetja Kganyago and 2 times to participants of the Team Treasury within the viewers. And when questioners looked as if it would be making an are attempting to search out confirmation of their bear biases, Godongwana adopted up with clarity.
The MTBPS, or Mini-Budget because it’s most often referred to, became as soon as launched in 1997 by Trevor Manuel, the longest serving and by a long way most a hit of the democratic SA’s finance minister (he twice delivered a Budget Surplus – none of his successors devour even come shut).
Read also: SA’s four horsemen of Economic Obstacle – and how Enoch plans to united states them…
The innovation became as soon as Manuel’s are attempting to stimulate debate between the annual Budget speech in Feb/March. Moreover, to amass away the intense market and other speculation sooner than the as soon as-a-year occasion where the monetary world proverbially came to a cease. Within the identical context, Manuel also launched a rolling three year idea.
In his well-managed press corps debut recently, Godongwana took distress to expose the relevance of the job which has received SA plaudits globally as having one amongst doubtlessly the most transparent Budgetary processes on this planet.
It became as soon as also a natty blueprint of deflecting doubtlessly the most complex of the questions – given the tight budgetary constraints, what’s the ANC executive going to construct in regards to the actual COVID-19 grants when the most up-to-date extension expires in March.
Godongwana batted that away by explaining that cabinet has determined on a Budget with spending of R1.9trn (against anticipated revenue of R1.5trn). It is a long way now no longer his nor Treasury’s accountability nor remit to alternate that. If cabinet wants to continue the actual social grant or, indeed, the important mentioned Traditional Profits Grant, this must salvage the money by putting off one thing else from within the agreed R1.9trn. Or elevate taxes to fund it. Or resolve to magnify the Budget deficit.
Larger taxes are aesthetic important out of the search files from for an already overburdened populace as 7m pay within most profits tax (115,000 of them a quarter of it) and 18m already gain grants.
Ditto increasing the Budget deficit which hit a chronicle 14% in 2020 and on a straight away related basis is at 9% this year (7,8% after the GDP adjustment, but serene crazy high). On myth of that merely adds to already excessive debt, where interest payments myth for 21c in each and every Rand for the time being spent.
That makes it a deliberate decision by cabinet to spend extra money on SA’s already extremely redistributive first payment-heart-broken Budget (60% of which is allotted to the “Social Wage”).
From what I saw recently, SA’s finance ministry has a pragmatist within the Tito model. Somebody even maybe higher at explaining the field in phrases that each person can perceive. A welcome antidote to the never-ending fudging, faux promises and outright gambles that punctuated so important the Budgetary prognostications of the previous decade or so.
So what else did we learn recently?
First, that SA’s fiscal gap is deep. So deep that a R128bn revenue windfall from a commodity ticket development became as soon as gobbled up almost entirely by executive spending. Easiest R20bn of that bonus has now no longer but been spent. Authorities spending must be “restrained” for the next three years. By necessity now no longer preference.
2d, that Treasury’s long-time and customarily isolated economic pragmatism seems to be to be spreading. For occasion, as Godongwana identified, for the previous 13 years the ANC executive “has tried to repair Eskom reasonably than fixing the provision of electricity.” No extra. That’s a huge step for a Pretoria goodbye devoted to centralist thinking.
Third, and maybe most importantly, the man who doubles up because the ANC’s economic approach tzar sees the within most sector because the main to economic prosperity. Whether or now no longer that’s thru business being empowered thru structural reforms or encouraged through Public Non-public Partnerships. That’s a huge ideological mindset shift. Indirectly.
Godongwana ended his presser by referring to the 1992 ANC coverage assertion which, even then he acknowledged, envisaged a feature for SA’s within most sector. Per chance the penny has at closing dropped.
And after a succession of broken promises, why will devour to we deem the novel man? I asked him that and his response wasn’t convincing. Or even it became as soon as.
We’ll know extra, he acknowledged, by the Train of the Nation. So maybe his long-standing union and occasion friend Cyril has one thing up his sleeve? Let’s hope.
- Join Alec Hogg in a obvious interactive webinar tonight at 7pm where he’ll unpack the 2021 MTBPS. It’s free to all but you construct devour to register beforehand. Here’s the registration link: https://attendee.gotowebinar.com/register/2496928653433814286.
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