Cape Town – Finance Minister Tito Mboweni has tabled a tight Budget with indications of low growth and rising debt in the next few years.
But political parties on Wednesday warned that the country's economic woes have deepened with the increase in the deficit and more bailouts for state-owned entities, including SAA.
The DA, IFP, UDM, Cope and ACDP said the Medium Term Budget Policy Statement had presented a dire financial situation for the country, with a poor outlook for the next five years.
Mboweni said the economy would contract by 7.8% this year and this followed a poor showing in the first two quarters of the year. Statistics South Africa released figures recently that the economy shed 2.2 million jobs in the second quarter.
President Cyril Ramaphosa warned in Parliament this week that this has led to only 14.1 million being employed in the country.
Mboweni said the economy was expected to grow by 3.3% next year. But he warned that the debt crisis was threatening to even erode the fiscus.
The public finances are already in a parlous state with low growth and lack of investment. He said the debt was to reach 95% of GDP in the next five years.
"The medium term fiscal strategy narrows the main budget primary deficit from an expected R266 billion in 2021/22 to R84bn in 2023/24 and we achieve a surplus by 2025/26," said Mboweni.
"We forecast the South African economy to grow by 3.3% in 2021, 1.7% in 2022 and 1.5% in 2023," said Mboweni.
He also announced the bailout of SAA. The national airline has been in a serious financial crisis in the past few months and is in business rescue.
Mboweni said the R10.5bn given to SAA will help the airline to deal with the business rescue plan.
.Mboweni also debt will have to be reined in and this will boost growth.
The minister of finance also announced that he wants to reduce the wage bill over the next four years. He said they will freeze salaries for public servants and reduce salaries for politicians and senior officials in national and provincial departments and municipalities.
He said Minister of Public Service and Administration Senzo Mchunu will negotiate with the unions on this matter.
But Cosatu said it rejected Mboweni's plan to freeze salaries for public servants.
He said they have in the past warned against Mboweni about making such announcements in Parliament without talking to the unions first.
"If you go out there and make pronouncements, you are not negotiating in good faith. The problem with making these announcements is you are trying to appease lenders and ratings agencies," said Pamla.
Political Bureau