The DA notes the revelation that President Cyril Ramaphosa, Finance Minister Enoch Godongwana and Reserve Bank Governor Lesetja Kganyago met urgently in a desperate attempt to respond to the growing public financial crisis caused by the government.
The meeting is understood to have followed the Treasury’s announcement that it would need to implement urgent measures to curb runaway public spending amid deteriorating public finances – the situation is exacerbated by the Treasury’s overly optimistic projections in his February budget.
The DA expressed concern that there was no provision in the February 2023 budget for an extension of the Social Assistance Distress (SRD) Allowance beyond April 2024. response, the government said a revised social security model was being designed, followed by silence. This meeting may well be part of a desperate race to find money to fund an extension of the subsidy and also to close the huge gap between projected and actual revenues.
The simple fact is that the government is strapped for cash and cannot fund the positions budgeted in February, let alone the SRD.
The root cause of this crisis remains timid economic growth, barely 0.6% in the last quarter, well below the government’s own projections. This is a direct result of failed economic policy and poor fiscal choices, such as positioning the government in the wrong place in the economy; a bulging wardrobe; a proliferation of agencies that are nothing more than expensive employment agencies for ANC executives; barely keeping desperately bankrupt state-owned enterprises afloat; an energy crisis that has significantly disrupted the ability of businesses to operate and systemic corruption that has led to gray listing, undermined business confidence and deterred local and foreign investment. The list goes on.
It appears that the government is incapable of making the difficult choices that are necessary to keep South Africa afloat financially. Cutting spending at the periphery won’t work. Offer early retirement to public sector employees; cutting visible policing and other essential services will make no difference. Reducing the size of a bloated cabinet would be a positive step, and it would require reducing the civil service from overpaid and underproductive management layers and not from overworked frontline service providers.
Decades of economic mismanagement have come to a head. Poor economic policy choices, coupled with the government abandoning its stated stance of non-alignment, have resulted in a hostile investment environment.
The ANC government is financially strapped and the Minister of Finance has no one to turn to. It will have to reduce its spending and finance an extension of the SRD, without having access to more loans. A really very difficult space.
Something will have to change and the best solution for South Africa would be a new government that can begin the process of turning around our ailing economy, before it is too late. The DA will present our alt MTBPS which will outline how a DA government would tackle the current, untenable situation.
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