We are far from being alright - economist

During the 2018 Budget Speech, former finance minister Malusi Gigaba quoted rapper Kendrick Lamar that "We gonna be alright".

Twelve months later as the country is looking forward to minister Tito Mboweni's Budget Speech, economist Mike Schussler says 'we are definitely not alright' as South Africans discover how deep the country's problems go.

Read: Top reasons why Tito Mboweni's Budget will be one of SA's toughest to date

We are finding out how deep our problems are and it is quite scary.

Mike Schussler, Chief Economist - Economists.co.za

Schussler says if the minister only had to balance the sheets to deal with a slow economy it might not be so bad, but he still has Eskom to deal with.

Our revenue and taxes are going to increase quicker than inflation where our expenditure (education, grants) will increase slower than inflation and we will feel the pinch.

Mike Schussler, Chief Economist - Economists.co.za

Apart from all those difficulties, he is being given the Eskom problem and we don't know what he is really going to do.

Mike Schussler, Chief Economist - Economists.co.za

Schussler says he is quite sure that SAA and Eskom will receive money from the government but the question is how much.

Lebohang Pheko, senior research fellow and political economist at Trade Collective agrees with the notion that this is going to be the most difficult budget speech since the dawn of democracy in 1994.

She says the fact that it is an election year changes the dynamics because the minister has to bear in mind that he is not just speaking to taxpayers but also a potential electorate.

She argues that the events of the past twelve months make it difficult for Mboweni to balance all of these considerations.

Against this backdrop, the finance minister not only has to play this balancing act trying to make the rating agency happy but also he has to deal with the education system that is at a state of implosion at the moment.

Lebohang Pheko, Political economist - Trade Collective

We do have to find money for fees, solve the NSFAS situation, public sector wage bill. And that's not just about the high end. We still have teachers that need to be paid adequately, nurses, police officers, government doctors and so on.

Lebohang Pheko, Political economist - Trade Collective

They are the backbone, the heart, and soul of the public sector...

Lebohang Pheko, Political economist - Trade Collective

Pheko says it is going to be impossible for the minister to cut spending, and increase revenue without overburdening and upsetting voters.

Mike Shingange, first deputy president of Cosatu says it is expecting a budget speech that will not threaten the well-being of the workers.

He says there was no mention of privatisation of the state-owned entities during the State of the Nation Address and it would be surprising if the finance minister goes that route.

Last year the president convened both the job summit and investor summit and Treasury will have to present a mission and plan to implement those commitments.

Mike Shingange, First deputy president - Cosatu

The Auditor General said that every year we are losing 10% of the national, provincial and local budget through the looting and if you stop that looting of the 10% without raising tax we can save above 100 billion in order to deliver services to our people. These are the things we thought the minister would address.

Mike Shingange, First deputy president - Cosatu

To hear the rest of the conversations on the Budget Speech, listen below:


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