JOHANNESBURG - Finance Minister Tito Mboweni stood at a crossroads with a country on the brink of a debt crisis and more financial woes.
In his usual eccentric manner, Mboweni said the country was at a precipice similar to the one it faced at the dawn of democracy.
Quoting late president Nelson Mandela, Mboweni said South Africa needed to meet despair with hope and death with the reaffirmation of the beauty of life.
“We must rebuild our economy, rehabilitate our public finances and recover from the devastation wrought upon us by Covid-19,” he said.
Mboweni tried to look calm as he assured the nation it would get out of the economic crisis if it did things right.
He continued to use scripture as his guide in instilling hope amid the hour of despair.
Mboweni warned the country was facing the toughest hour. “In a football match this would be described as injury time,” he said. “There is no time left. Ours is to wait and see.”
Yet behind the calmness Mboweni managed to give the country the news it dreaded to hear: the country’s balance sheet was on a slippery trajectory.
He said the revised fiscal framework puts South Africa on a course to stabilise the ratio of debt-GDP at around 95 percent within the next five years; the stock of gross debt would rise from roughly R4 trillion this year to R5.5 trillion in 2023/24 and the medium-term fiscal strategy narrows the main budget primary deficit from an expected R266 billion in 2021/22 to R84bn.
He said economic growth was now forecast at 3.3 percent for next year, 1.7 percent in 2022 and 1.5 percent in 2023.
But, he said there was no need for despair.
“We cannot allow our recent fiscal weakness and the pandemic to turn into a sovereign debt crisis,” he told Parliament.
“Our job is not to tremble in fear at the storm blast, neither at plagues nor at the wide-open mouth of the hippopotamus. Armed with a strong sense of direction, steadfastness, resolution and determination, we face these perils head-on. Our compass points towards fiscal sustainability and we must all face the same way.”
For some reasons, Mboweni still believes there is time left if the government and his colleagues in the Cabinet do the right thing to reset the economy.
However, he is mindful that the country has run out of time, the patience of the people is running thin and business is struggling.
His warning was stark: South Africa could go the Argentina route of a debt trap if it fails to put the right things in place.
This is the tough choice for South Africa. It cannot afford the Argentina route, but the signs are all there.
Mboweni continued to throw in some punctuations and send a message of hope that despite the looming crisis there is hope at the end of the long dark road.
The minister first started his speech on a positive note reminding the country that Mandela had pulled the country from another worse crisis in 1994 and a few years down the line the economy started to thrive.
“When the government took over power 26 years,” he said, “there was no money in the kitty; it was left to the will of the political leadership of Mandela to get the country out of trouble.”
Mboweni maintained this was a battle to be fought and it needed to be won. Mboweni kept his composure delivering the toughest Medium Term Budget Policy Statement in his two years in charge of the National Treasury, with projections that paint a gloomy picture for the economy. He may have said a lot yesterday but the facts are in the detail with the government following up.
Mboweni is firm that the government needs to get its priority right.
As he delivered his speech Mboweni needed a lot of support from his colleagues in the ruling party benches and other political parties. MPs had interjected at one or two occasions, in a round of applause when he made remarks that were in full support of members of the House. It was on these occasions that Mboweni reiterated the need to stick to fiscal consolidation.
In emphasising his point on key decisions including freezing the salaries of public servants and reducing salaries for politicians, he read the line twice to ensure fellow MPs understood.
It was on these occasions that Mboweni said they would require support for other MPs to ensure debt stabilisation.
“There cannot be any slippage on the fiscus there is no room for slippage.”
Mboweni insisted he will not walk this road alone as it requires the public support. The next few weeks and months will be hard and long, but there is a glimmer of hope at the end of the tunnel if the right things are done, said Mboweni.
This will be a difficult hour and moment, but it will not take a miracle to get the country out of the financial crisis. Mboweni warned that this is not the time to cower, but to focus on building a foundation that would cement a positive outlook in the next two years.
He said Covid-19 had not yet been defeated and the war was not over.
Mboweni has sounded the alarm bells and he urged the nation to rally behind the state.
BUSINESS REPORT