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South Africa scales back public spending in budget presentation to parliament

All eyes will thus be on Finance Minister Tito Mboweni as he is expected to scale back public spending and find ways to raise revenue.

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South African Finance Minister, Tito Mboweni./AFP

South Africa’s finance minister, Tito Mboweni is expected to walk a tightrope during the annual budget presentation to parliament on Wednesday, as the economy teeters on the edge of a fiscal cliff.

The continent’s most industrialised economy has in recent years lurched from one economic woe to the next.

Weak growth, deteriorating public finances including a swollen budget deficit, crippling power cuts and soaring unemployment still cloud the outlook, an AFP report said.

President Cyril Ramaphosa has alluded to the crises, warning during a state of the nation address last week that government debt was “heading towards unsustainable levels”.

The “economy has not grown at any meaningful rate for over a decade”, said Ramaphosa, adding that desperately needed growth was being hampered by persistent power outages imposed by state-owned electricity firm Eskom.

Unemployment is creeping towards 30 percent, the highest level in more than a decade.

All eyes will thus be on Finance Minister Tito Mboweni as he is expected to scale back public spending and find ways to raise revenue.

Faced with a national debt equivalent to around 60 percent of gross domestic product and a budget deficit of around 5.9 percent of GDP, Mboweni has little room to manoeuvre.

“The government continues to find itself unable to flex the political muscle required to implement the sweeping reforms it has been promising,” noted Eurasia Group Africa director Darias Jonker.

Old Mutual Investment Group’s chief economist Johann Els emphasised that the treasury had been “unable to rein in the budget deficits” over the past few years. 

“It is really now or never,” he cautioned.

– ‘Slow growth, credit downgrades’ -Mboweni’s budget will also be under the scrutiny of international ratings agency Moody’s, the only major assessor that still considers South African debt to be investment grade.

Fitch and S&P downgraded its credit rating to junk status in 2017.

“We are on the verge of a Moody’s rating downgrade, and if we don’t stabilise the deficit and get spending under control, they will downgrade us,” Els said.

Losing its last investment grade rating could spark an exodus from South Africa’s bond markets and pile pressure on the rand.

The country’s lacklustre economic performance is largely a result of domestic issues.

Repeated bailouts to state-owned entities over the past decade — most notably to Eskom and flag-carrier South African Airways — have drained state coffers.

“The government desperately needs to move away from consumption expenditure and to infrastructure investment,” said Azar Jammine, chief economist at Econometrix, an independent consultancy firm.

In the past five years, South Africa has posted it weakest growth rates — never exceeding 1.3 percent and in certain years falling below one percent.

Treasury officials expect the economy to have expanded by around 0.5 percent in 2019.

The World Bank recently warned that South Africa was on a precipice, and cut its economic growth forecast to below one percent in 2020 as well due to electricity supply concerns.

“This paucity of growth also means there is no question of raising new revenue through new taxes,” said Geordin Hill-Lewis, the opposition Democratic Alliance’s shadow finance minister.

The minister must “present a credible plan to stabilise national debt, contain the budget deficit and prevent a fiscal crisis,” Hill-Lewis concluded.

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East Africa Politics News

Uganda Election: Nigerian Lawyer, Falana, Takes Museveni Complaints to the UN

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Nigerian lawyer and human rights activist, Femi Falana (SAN), has filed a complaint at the United Nations against President Yoweri Museveni of Uganda over the illegal detention of Robert Kyagulanyi aka Bobi Wine.

Bobi Wine, a former reggae musician, had been under house arrest since Thursday night.

News Central reports that 38-year-old Bobi Wine was Museveni’s main challenger in the 14 January 2021 Presidential election.

Contesting as a presidential candidate under the umbrella of the National Union Platform (NUP), Bobi Wine had emerged second best after polling 38 per cent of the votes.

Museveni was declared winner after claiming 58 per cent of votes cast.

However, Ugandan forces had condoned off Wine’s house since last Thursday, effectively keeping him and his wife under house arrest and incommunicado.

On Tuesday, the United States Government announced that the U.S. Ambassador to Uganda, Natalie Brown, had been barred from seeing Bobi Wine

In a statement same day, Falana said that Bobi Wine had been denied access to his lawyers in a bid to prevent him from filing a petition against the declaration of Museveni as the winner of the highly flawed Presidential election.

“We have submitted a complaint against the government of Uganda to the United Nations Working Group on Arbitrary Detention concerning the detention of the detained couple,” Falana said.

The complaint by Falana, which was attached to the statement, read in part, “Mr. Wine and his wife are being illegally detained for days without any criminal charges preferred against him. He has also been denied adequate supply of food by hundreds of Uganda military forces and policemen who have laid siege to his house for the umpteenth time since the election day.

“I am therefore seeking an opinion from the Working Group finding the house arrest and continuing detention of Mr. Wine and his wife to be arbitrary and in violation of Uganda’s Constitution of 1995 (as amended) and obligations under international human rights law including the International Covenant on Civil and Political Rights and the African Charter on Human and Peoples’ Rights to which Uganda is a state party.”

Also, a top U.S. diplomat to Africa, Tibor Nagy, called Uganda’s electoral process “fundamentally flawed,” citing “authorities’ denial of accreditation to election observers, violence and harassment of opposition figures” and the arrest of civil service organization workers.

“We continue to urge restraint and rejection of violence by all actors as Uganda’s election results are announced,” said Nagy in a series of tweets,.

“The immediate and full restoration of Internet connectivity is essential. The U.S. response hinges on what the Ugandan government does now.”

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East Africa Politics News

Somalia Denies Its Soldiers Participated, Died in Ethiopia’s Conflict

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Osman Abukar Dubbe, Somalia’s Minister for Information Culture and Tourism, has denied reports that Somali soldiers trained in Eritrea took part in the fighting between the Ethiopian National Defense Forces (ENDF) and the TPLF in Ethiopia’s Tigray province.

Dubbe also dismissed as untrue reports that hundreds of Somali soldiers were killed in the conflict.

The minister said, “There are no Somali soldiers who have been enlisted by Ethiopia or taken part in the Tigray region fighting.

“It is unfortunate that people are trying to find political gains from our national army.

“We are confirming that the fake news, which is meant for politics and business, that claimed Somali troops training in Eritrea took part in fighting in Tigray Region, northern Ethiopia, is not true.”

The minister said the Ethiopian government did not request Somali soldiers to fight in Tigray.

Dubbe said similar “propaganda was spread in the past claiming Somali soldiers took part in fighting in Libya and Azerbaijan, which was confirmed to be fake”.

The minister’s statement comes after a former deputy chief of Somalia’s National Intelligence and Security Agency (NISA), Abdisalan Yusuf Guled, claimed some 400 Somali soldiers were killed in Tigray in November last year.

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North Africa Politics

President Kais Saied Urges Restraint, 4 Days into Protests in Tunisia

The Tunisian President Kais Saied visited Ariana, a city near the capital Tunis, and asked people not to let others take advantage of their anger and poverty

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The Tunisian President has showed up at a rally where demonstrators were protesting and pleaded with them to put an end to the protests which are already in their fourth consecutive day against the worsening social and economic crisis in the country.

Blocking streets and setting barricades on fire on Monday, demonstrators clashed with police who responded by firing tear gas. The Protests have led to the looting of shops and protesters have thrown stones and Molotov cocktails at official buildings and businesses in some areas.

The Tunisian President Kais Saied visited Ariana, a city near the capital Tunis, and asked people not to let others take advantage of their anger and poverty.

“Through you, I want to speak to all the Tunisian people, I know the state of poverty and I also know who is exploiting your poverty.  Don’t let anyone exploit your misery, don’t attack private or public property. We live today because of moral values and not because of theft or looting,” Saied said to the crowd.

Angry about the high unemployment rate and the financial crisis in the North African nation, Tunisians have protested since Friday in Kasserine, Tunis and several other cities.

On Monday, demonstrators shouted: “Dissolve the parliament, dissolve the parliament.”

In some regions, the defence ministry deployed the army to protect private and public property. It said troops will conduct joint patrols with security forces in the regions of Siliana, Kasserine, Sousse and Bizerte, where police and protesters clashed.

Authorities made 630 arrests linked to the violence on Sunday alone, the interior ministry reported.

Amnesty International has called for restraint, citing footage showing officers beating and manhandling people they had detained. They have also demanded the immediate release of Hamza Nassri Jeridi, a rights activist arrested on Monday.

“Security forces must immediately refrain from using unnecessary and excessive force to disperse protesters in the capital and several governorates against marginalisation, police violence, poverty and lack of job opportunities,” it said.

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