Finance Minister Tito Mboweni has presented a tight budget over the next few years with signs of lower growth and rising debt.
DA, IFP, UDM, Cope and ACDP stated that the Medium Term Budget Policy Statement presented a dire financial situation for the country with a poor outlook for the next five years.But political parties warned on Wednesday that the country’s economic crisis deepened, with an increase in losses and greater bailout for state-owned entities, including the SAA.
Mboweni said that the economy would decline by 7.8% this year and after that the first two quarters of the year fared poorly. Statistics South Africa recently released figures that the economy shed 2.2 million jobs in the second quarter.
President Cyril Ramaphosa warned in Parliament this week that it provided employment to only 14.1 million people in the country.
Public finances are already in a sparse state with low growth and lack of investment. He said the debt was to reach 95% of GDP in the next five years.
Mboweni said the economy is expected to grow by 3.3% next year. But he warned that the debt crisis was also threatening to reduce the risk.
Mboweni said, “The medium-term fiscal strategy cites the main budget primary deficit from R266 billion in 2021/22 to R84bn in 2084/24 and we achieve a surplus by 2025/26.”
“We forecast the South African economy to grow 3.3% in 2021, 1.7% in 2022, and 1.5% in 2023.”
He also announced SAA bail. The national airline has been in a severe financial crisis and commercially defended over the past few months.
Mboweni said the R10.5bn given to SAA would help the airline deal with the commercial rescue plan.
Debt will also have to be repaid in Mboweni and this will promote development.
The Finance Minister also announced that he wants to reduce the salary bill in the next four years. He said they would freeze salaries for public servants and reduce salaries for leaders and senior officials in national and provincial departments and municipalities.
He said that the Minister of Public Service and Administration Senzo Machunu would hold talks with the unions on the matter.
But Cosatu said he rejected mboweni plan to freeze salaries for public servants.
They said that they had previously warned against making such announcements in Parliament against Mboweni, without first speaking to the unions.
Pamla said, “If you go there and make an announcement, you are not negotiating with good faith. The problem with making these announcements is that you are trying to please lenders and rating agencies.”