“So we hope that Finance Minister Tito Mboweni is right about the economy returning to growth next year and we welcome all the Medium-Term Budget allocations to support job creation initiatives, and especially those projects that aim to create new infrastructure and repair SA’s decaying road and rail networks. Good infrastructure is not only essential for a functioning economy, but creates confidence among investors and, through them, further economic growth without the government having to borrow more money.   

“Other positives in today’s speech as far as we are concerned are the allocation of a further R2,2bn to the social housing subsidy scheme; the allocation of a further R7bn to the Land Bank and thus the farming community; and the transparent accounting the Minister gave of how the R500bn Covid-19 relief fund that the government announced in April was spent.:

“In addition it was good to hear that the applications that will allow cities such as Cape Town and Johannesburg to provide their own power are being fast tracked – and that almost 12MW of additional power from Independent Power Producers will be available soon. This will hopefully mean that loadshedding becomes a thing of the past.”

However, he says, some serious concerns remained unanswered by the Minister today, the first of these being what new taxes or tax increases South Africans can expect in the light of the huge increase in the Budget deficit from 6,4% of GDP at the start of this year to almost 15,7% of GDP now. It does not seem likely that this revenue shortfall can be recovered solely by cutting public spending, especially since there is such resistance to cutting the public sector wage bill.

“In addition, there is still no clarity about when (or if) the government intends to stop bailing out its failing SOEs. The additional R10,5bn granted to SAA today, for example, could be put to much better use to help reduce of national debt. It was very sobering to hear that SA is currently borrowing at a rate of R2,1bn a day – and that our total debt is expected to reach 95% of our GDP over the next three years. We urgently need to reverse this situation if we seriously want to attract investors and create a decent future for South Africans that includes the real possibility of them buying their own homes and building up their own wealth.”