ISAAH MHLANGA: Mboweni’s budget not bold enough to curtail rising debt trajectory
While the 2020 budget reduces the government wage bill, the savings envisaged are simply re-allocated to support struggling SOEs
The 2019 medium-term budget policy statement (MTBPS) focused on four key areas, to which it committed the government to deliver in areas that would serve the South African economy well over the long term. While bringing realism to the economic assumptions underlying the 2020 budget, the government has backtracked on some key areas that could have been achieved had there been more political will, and compromises among key stakeholders.
The overall assessment of the 2020 budget is that it is realistic, but not bold enough to curtail the rising debt trajectory. It reflects the compromises between political stability, economic transformation and the need to have private sector-led economic growth. The compromises have negative economic consequences, particularly over the short term. What is important is that the Treasury has signalled its desire to improve the quality of spending by rebalancing government spending towards productive economic sectors.