As D-Day for the Medium-Term Budget Policy Statement (MTBPS) approaches, it is evident that the National Treasury will need to go against the political grain if it is to achieve its objective of presenting a “credible fiscal framework”.
That political grain is determined by the fact that 2024 is not only an election year, but an election year in which there is a real possibility that the governing African National Congress (ANC) might not achieve an outright majority, even though it is likely to secure the most votes.
Besides loadshedding, which remains the most obvious outward sign of the ANC’s governance failings, voters are increasingly angered by the role that corruption and the deployment of under-skilled cadres have played in the collapse of most State-owned companies and the decay in just about every public service, from water and road repair to health and education.
While the Covid pandemic undoubtedly amplified the country’s well-documented socioeconomic ills, blaming the pandemic is unlikely to win many votes. Likewise, there is a growing intolerance of those who blame apartheid nearly 30 years into democracy – a reality that has not yet dawned on some.
Given the short time left before elections, those in government would undoubtedly like to use the remaining months to put as much lipstick on the socioeconomic pig as is feasibly possible, using both ‘show’ and ‘tell’ techniques.
Through manifestoes, they will aim to ‘tell’ voters how resources will be directed their way in the form of everything from social grants to new services, while incumbent politicians will want to ‘show’ that they are delivering by having as many ribbon-cutting events as possible.
The last thing they want is a party pooper, who says there is no money for either show or tell. To deliver a credible fiscal framework, however, that is precisely the role the National Treasury must now play.
The reasons are clear for all but the ideologues to see: the lack of growth, together with ongoing and significantly more expensive borrowing, has placed South Africa on the very edge of a debt crisis; tax revenues are not keeping pace with the 2023 Budget forecast as the commodity windfall of 2022 dissipates; and daily power cuts and the collapse in the freight rail service are undermining any immediate turnaround.
Adding to its party pooper potential is the National Treasury’s lead role in the review of the configuration of government, which many see as bloated, and its programmes. The reconfiguration is likely to result in departments and programmes either being culled or downsized.
These changes will receive a mixed response. They will be described as long overdue and insufficient by some and raise the ire of others, who will argue that austerity will further undermine the economy’s recovery.
Given the stakes, the National Treasury should gird itself for the prospect of becoming a convenient scapegoat for those Ministers and party activist who will need someone to blame for their poor performances.