Neelam Rahim | firstname.lastname@example.org
30 September 2023 | 19:25 CAT
Earlier this month, Finance Minister Enoch Godongwana made a startling claim that “South Africa has run out of money”. National Treasury data showed that the budget moved to a deficit of R143.8 billion for July, the largest since at least 2003 and broader than the R115.5bn forecast by economists.
In an opinion piece, Phapano Phasha, an independent economic, energy and social policy analyst, writes that they believe that this is disingenuous and flawed.
Phasha said it is believed this is disingenuous and flawed. South Africans must demand accountability, responsibility and transparency from the National Treasury, which is solely blaming the surge in debt on government overspending and not the concrete objective reality that the Treasury is simply implementing the International Monetary Fund (IMF) mandated structural adjustments due to its reckless lending compounded by corruption and secrecy.
All government decisions are essential to fulfil its erroneous IMF debt obligations to reduce the national debt. This means there will be fewer resources to upgrade state capacity or build new ability to expand the democratic developmental state and NDP 2023, South Africa’s lynchpin economic framework.
IMF loans and mega Covid mismanagement have led to a multitude of crises. Policymakers are pursuing an extractive and destructive neo-liberal agenda that cloaks itself as “fighting corruption” or anti-corruption. At the same time, its genesis and logic of privatisation will mean utility costs will rocket – only to entrench poverty and create a system of cronyism.
The economic trajectory is neither democratic nor developmental but littered with corruption, greed and opportunism, with the authoritarian tendency of the Covid years the hallmark of the current epoch of the state.
Meanwhile, Renowned economist Dawie Roodt previously warned that South Africa is running out of money, but the spending cuts were not palatable in an election year.
Roodt said South Africa’s fiscal deficit would be much larger this year than what Finance Minister Enoch Godongwana budgeted for.
“The minister said they want to stabilise South Africa’s debt level at 70% of GDP, but it has already increased to 72%,” he said.
“South Africa’s fiscal deficit for 2023 is set to be between 6% and 6.5% of gross domestic product (GDP), much higher than the minister’s expected 4%,” Roodt said.
“I expect South Africa’s debt to increase to 75% of GDP by the end of the year and reach 80% of GDP by the end of 2024.”
The only way to reduce the country’s debt is to increase income through economic growth or cut spending.
Listen to the full interview on Your World Today with Mufti Yusuf Moosagie.