Where to now? I do wish that there was a clear path that will help us navigate this unfamiliar territory. Depleting government finances and increasing government demands is a cause for concern.
I become familiar that the Minister of Finance, Mr Tito Mboweni is a good cook, knowingly to cook a nice meal, you will need all the ingredients required. I am unsure if the Minister has all the ingredients to give us a well-cooked budget this time. The delivery of a well-balanced budget is remotely possible, especially when considering the year 2020 impacts.
2020 has been a year full of surprises, which has had an unprecedented impact on government finances. This year’s surprises have also resulted in the government looking for external funding sources to curb the Covid-19 influence. Internal revenue sources strained as the business activity has slowed down, so revenue or profit levels took another deep. This revenue slows down will result in government revenue declining significantly for the first time post-democracy.
The declining revenue is at the heart of the problem, as there are many challenges still facing the country, and all those need a significant amount of money to be fixed, sustained, or established. Within this same period, we have several state-owned entities that are still awaiting government bailout. To me, this is one of the biggest headaches facing the government, especially the finance minister in his budget preparation; what to do now?
We are currently facing a point where we need to choose between the state-owned entities survival versus what is essential for the citizens. For instance, the President announced an R350 grant extension for a further three months. The grant extension and the public sector’s employment opportunities will require a significant amount of money and not forgetting the requests from the SABC, Denel, SAA, etc.
The state-owned entities has recently been the most significant risk to the national treasury because of the yearly requests for bailouts and their inability to contribute to government finances. It is the opportune time for the Minister of Finance to act decisively with these yearly bailout occurrences. Something has to go. It is either we force these entities to be self-sustainable, or we rationalise some of them, especially those that the private businesses can do.
I will also think that the government as a significant shareholder will be involved. The Treasury will need to put their hands on the deck, as it is becoming clear that these requests are not reducing; instead, they are increasing. It does not help to continue bailing out the state-owned entities without understanding the root causes of their inability to remain sustainable.
Let us look at improving efficiencies in all government entities.