By Daanyaal Matthews
The Minister of Finance, Enoch Godongwana, is expected to deliver the annual Budget Speech on Wednesday, February 21st. The address plays a crucial role in setting the financial tone for the government heading into the year, and, with this year being an election year, added pressure has mounted.
The South African economy has been riddled with holes mainly due to the failure of logistical enterprise Transnet, failing to execute exports; Eskom failing to provide energy; and social debts mounting. These conditions have led to an increase in fuel and electricity rates and the depreciation of the rand, as investors hold little faith in an ailing economy. The Treasury has attempted to mend the hemorrhage by introducing austerity measures, which have cut spending across the board, with the Western Cape Education Department (WCED) reporting millions in expected support reduced.
Under these conditions, the words of Godongwana are crucial in dictating where the nation tends towards, and for Professor Heinrich Bohlmann, Associate Professor in the Department of Economics at the University of Pretoria, what needs to be seen is a sense of urgency to ensure that projects created are successfully fulfilled.
“What I’d really like to see is more funds being put towards Eskom, Transnet, but also monitoring and evaluation to make sure that all these nice plans actually get implemented and that we have results to show and not just come up with other plans next year this time,” said the Economist.
Prof. Bohlmann continued by arguing that the Finance Minister’s ‘hands are tied’, in terms of income generation, as he cannot simply increase taxes to offset the fiscal deficit, as that would detract businesses and subsequently limit government income.
“You can’t just keep on raising taxes; the Treasury is aware of that, so I don’t expect significant tax increases. But we really need to do something about jobs, and we have been saying this for years: “If the government can create an incentive for more businesses to start and invest, that would lead to more profits and income tax,” added Bohlmann.
