Finance Minister Tito Mboweni arrives to deliver his medium-term budget policy statement at parliament in Cape Town, South Africa October 24, 2018. Picture: REUTERS/SUMAYA HISHAM
Finance Minister Tito Mboweni arrives to deliver his medium-term budget policy statement at parliament in Cape Town, South Africa October 24, 2018. Picture: REUTERS/SUMAYA HISHAM

Opposition parties say they are not impressed with Finance Minister Tito Mboweni's maiden medium-term budget policy statement.

Mboweni almost halved the National Treasury’s growth forecast, while predicting a steady rise in debt.

DA shadow finance minister David Maynier said the policy statement showed that the "new path" of economic growth, employment creation and transformation had failed SA.

The policy statement revealed a "full-scale budget blowout", with stagnant economic growth, lower-than-expected revenue, higher-than-expected expenditure and bail-outs of state-owned enterprises, he said. Compared with the main 2018 budget there was significant "fiscal slippage" with the fiscal deficit increasing by R22bn in 2018/2019, R33bn in 2019/2020 and R41bn in 2020/2021, he said.

The national debt would increase by R19bn in 2018/2019, R55bn in 2019/2020 and R103bn in 2020/2021. National debt would stabilise only years later,  at 56.5% of GDP in 2025/2026.

Maynier said this meant that the debt-servicing costs would "skyrocket" to R247bn in 2021/2022. This  was R148bn more than the country spent on police, R55bn more than it would spend on social grants, and was equal to what would be spent on basic education in 2018.

This "is why ordinary people, who are battling to make ends meet, and who are battling to put bread on the table, are likely to be hit by further tax increases over the medium term, to effectively bail out the governing party, who have mismanaged the economy for more than a decade in South Africa", he said.

The EFF said Mboweni's policy statement indicated clearly that the ANC was unable to reimagine SA's macroeconomic framework. 

The new minister gave no tangible plan for reducing the debt-to-GDP ratio, it said.  Ten years ago this ratio was less than 30%, but now it was 60% and so there was a possibility that in the current medium-term expenditure framework it would reach 100%.

"The EFF registers its utter disappointment that there was no mention of dealing with the phenomenon of illicit financial flows, tax-base erosion and tax avoidance by in the main multinational companies," the party said.

Finance Minister Tito Mboweni kicked off his debut medium-term budget speech with a quote from Charles Dickens' A Tale of two Cities. Here are some of the highlights from his speech on October 24 2018.

"In a situation where revenue collection is not meeting the needs of our budget, a policy statement that does not speak to the phenomenon of illicit financial flows is totally unacceptable."

The EFF said failure to address all tax gaps in the absence of solid nontax revenue indicated that it was workers who would continue to carry most of the tax burden. 

The Inkatha Freedom Party said Mboweni's address was a missed opportunity to address SA's  economic challenges.

"It was weak, lacked substantive measures on debt-servicing costs and he presented nothing new on improving state-owned entities and strengthening accountability measures across the board," said IFP spokesman Mkhuleko Hlengwa.

Mboweni failed to provide substantive details on the implementation of President Cyril Ramaphosa's stimulus package and there was little focus on the National Development Plan, which meant the recovery plan existed in a "complete vacuum", he said.

The IFP expressed "serious concern" about there being no contingency reserves with all funds having been used up.

"Should our country face a major disaster, or any emergency, we will not be able to fund relief efforts or meet demands thereof," Hlengwa said.

The IFP said state-owned enterprises had been helped through bail-outs and not through proper management.;

Read the full speech: