Sometimes, upon reflection and with the passage of time, an event that one originally considered to be disappointing becomes more tolerable. Wednesday’s Medium Term Budget Policy Statement (MTBPS) was unfortunately, not one of those events.
For Finance Minister Tito Mboweni, there was no hiding the stark statistical reality. A massive increase in the budget deficit from 4.3% of GDP to 6.2% just since February; the national debt at R3-trillion rising to as much as R4.5-trillion over the next three years; Debt to GDP on a break-neck march to over 70%; tax collections down by some R53-billion and yet another downwards revision of broader GDP growth to an almost stagnant 0.5%. It was, in essence, nightmare stuff.
For all the talk, analysis and promise of turnaround, there was precious little that the Minister could report as any success achieved since the main Budget in February. If anything, his dismal report-card has simply extended the pain felt by many South Africans as precious few new policy interventions seem likely – at least in the short-term.
By now, it has become clear that the political dynamics within the ANC are preventing meaningful reform. Coming out of a destructive decade of market-unfriendly internal party dynamics, the ANC still cannot resolve the now urgent need to compromise on its own ideological purity and remove the straight-jacket that is not-so-slowly anymore squeezing the country towards a fiscal cliff and possible financial ruin.
The broader MTBPS really exemplifies the stultifying political impasse that emanates from the ruling party. Damned if they reform (from their Unions and leftist base) and damned if they don’t (as the coffers run dry). That’s where the ANC stands currently And South Africa too.
In seeking a way out of the quagmire, there are no easy options. For the moment, as President Ramaphosa still gingerly finds his political feet, the emphasis has been on an institutional clean-up. Nothing wrong with that. You have to start somewhere and there is much broader political buy-in to recreating a capable state than there is to economic policy change.