Here’s how to boil a frog, slowly but surely. First, you take money from the gold and foreign exchange contingency reserve account, as the government did in 2024, so a decent budget can be tabled. This year, there is a VAT increase, possibly. And what about next year and the years after? It could be a pension contributions holiday affecting public servants, as has been suggested in recent weeks.
This shuffling around is symptomatic of a deep problem in an economy that can’t grow fast enough, and of a political class that is not prepared to take the tough decisions required.
Finance minister Enoch Godongwana rightfully gets stick for his plans to increase VAT. He should be also credited for refusing to take on more debt, as the government’s ability to service its loans is getting more compromised by the day.
Where no-one wants to go fast is in spending cuts, as the decisionmakers — the MPs, including cabinet ministers — are themselves beneficiaries of state largesse.
You have to wonder what future budget considerations will look like when Godongwana is no longer around. There will still be spending that needs to be financed and little money to disburse.
Will his successors be as focused on keeping the lid on public debt as he is?
Over the years, the National Treasury has made unrealistic projections about public debt. Each budget statement forlornly hopes that debt will stabilise the following year. And, as is the way with spirals, we have been notching up more debt and making more promises to contain it.
It remains to be seen if Godongwana can sustain his wish to put a leash on public debt. His proposed budget does not cater for the mayhem unleashed by the Orange Guy, which includes a freeze on aid for critical programmes such as HIV/Aids. The finance minister might have to make serious adjustments just six months down the line when the medium-term budget policy statement comes around.
He will be relieved that he could table his proposals on Wednesday. It is up to the MPs now to dissect the budget now.
The sky is not about to fall and I have little doubt that the budget will pass, albeit with some noise and uncertainty in the next two months.
First, legal and practical complexities make changing a tabled budget hard. MPs cannot increase spending to levels above those in the Godongwana proposals. So, they have to approve the fiscal framework first without getting into the nitty-gritty of which department gets what.
I do not see how the social development portfolio committee will move money to its counterparts in tourism or transport
Second, MPs must discuss budget allocations at the portfolio committee level. That’s where they work in silos. I do not see how the social development portfolio committee will move money to its counterparts in tourism or transport.
If that happened, the budget would look like a dog’s breakfast pretty fast and everyone will wish to accept Godongwana’s proposals as they are. Pretty soon, half the MPs will be ready for the budget to be adopted, in a version not too far from how the finance minister presented it.
We are watching political theatre in motion.
The DA has opposed the budget proposals, hinging its resistance mainly on the VAT issue. One hears that the DA wants more concessions from the ANC, not necessarily directly linked to the budget. The DA sees an opportunity to pressure the ANC to push for the privatisation of parts of Transnet and the rail and port infrastructure.
The ANC may not be opposed to this but may not be too happy to have a gun to its head, especially on the eve of the national budget. It’s a high-stakes game for the DA. Bravo if it gets its way in the next couple of weeks. However, it would look silly if the budget was kicked around as a political football for too long.
The DA’s backers in business will not want to watch the markets yo-yoing over a budget stalemate in which the second biggest party in South Africa comes across as unreasonable.
The ANC often threatens to ditch the DA for the EFF. That’s not about to happen any time soon. Both the ANC and the DA are sensitive to how big business and the markets feel about the GNU. It is like a marriage of convenience; the two parties are closer to one another than they realise.
• Mkokeli is lead partner at public affairs consultancy Mkokeli Advisory.
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