A fundamental choice: ‘State Ambition’ versus giving ‘Power to the People’

The following statement was delivered by DA Shadow Minister of Finance, Geordin Hill-Lewis MP, during a press conference on the DA’s expectations ahead of the Finance Minister, Tito Mboweni’s Medium-Term Budget Policy Statement. Hill-Lewis was joined by DA Shadow Deputy Minister of Finance, Dion George MP.

  • Please find attached a full preview document here.

In an already extra-ordinary year, this week the Finance Minister, Tito Mboweni, will deliver his third budget of 2020.

While economic conditions have changed dramatically since the first budget was delivered in February, the core responsibility of the National Treasury has not.

The Treasury, and the Finance Minister, must restore South Africa to a sustainable debt path and re-establish fiscal discipline.

Equally important is protecting essential public services from deep budget cuts. These two goals are related. If we spend more on interest on debt, we will have less to spend on essential services.

And if spending is focused on wasteful projects and failing state companies, there will be less for essential services.

The Minister and his excellent Treasury team know this full well. That is why the Minister committed the government to achieving primary balance and debt stability by financial year 2023/24.

In that budget, the Minister set out clearly the risks associated with failing to close the mouth of the hippo – the yawning gap between government revenue and government expenditure.

This was the so-called “active scenario” requiring meaningful progress on wide-ranging economic reform to reorient the economy for growth.

The active scenario would require some difficult and painful decisions in the short term – most notably, deep cuts to the public wage bill, and ending the cycle of perennial bailouts for failing state entities.

These then are our core expectations for the medium-term budget policy statement:

  1. The Minister must show a credible path to debt stabilisation, and in the longer term, to debt reduction
  2. The Minister should commit himself to a formal legislated debt ceiling, ideally by supporting the DA’s Fiscal Responsibility Bill
  3. The Minister must protect essential public services from deep budget cuts, by focusing cuts on the public wage bill and through a root-and-branch reassessment of government spending
  4. The Minister must hold the line on bailouts to failing state entities, and should refuse any further bailout of South African Airways (SAA)

Failure to Reform:

The consequences of not achieving the “active scenario” are a full-blown sovereign debt crisis that would see South Africa cede a portion of policy sovereignty to international lenders, be they based in Beijing or Washington. More than that – far deeper cuts across every public service, affecting the poor above all.

Cabinet has so far paid little heed of Treasury’s warnings.

Like the stubborn patient who refuses to deal with a gangrenous foot, and so eventually loses the entire leg, the ANC has refused to take the action now that would prevent far more painful consequences later.

There has been little meaningful progress on economic reform, national debt continues to mushroom, and South African Airways (SAA) is set to receive another R10.5 billion bailout.

We expect that the trend in Mboweni’s speeches will continue of ever more dire warnings about what is coming, followed by inadequate action to change course. This means that we do not expect the targets in the “active scenario” to be met, and that Minister Mboweni will try to find ways to retreat from these targets.

The More Fundamental Question:

Lying behind various debt scenarios and fiscal targets, there is a more fundamental underlying problem that will continue to hobble any latent recovery.

South Africa’s economic recovery depends on a simple yet crucial choice that the ANC must make: state ambition versus giving power to the people.

The ANC must abandon its ambition for a state-led economy, which is smothering the entrepreneurial talent of South Africans.

In what was to be his final public engagement before his untimely passing, Professor Daniel Plaatjies (to whom we pay tribute for his long and distinguished contribution) spoke just 3 weeks ago of the ANC’s failed ambition to build a developmental state. He concluded that the edifice constructed by the ANC is developmental in name only – all of the ambition, with none of the substance.

This ‘state ambition’ with low capabilities and corruption has been a lethal combination: it has nearly crippled South Africa.

In pursuit of this ‘state ambition’, the ANC has expanded public spending massively.

This gamble has not paid off. South Africa now has high debts and nothing to show for it.

In pursuit of this ‘state ambition’, the ANC has given endless public financial support to state-owned companies whose control they have also guaranteed through cadre deployment.

Now, nearly every state-owned enterprise without exception is a failing businesses, with unreliable or collapsing services.

A bloated public sector delivers increasing salaries and declining services.

Roughly half of all South Africans above the age of 18 live below the upper-bound poverty line (R1 227) and, by law, they are not permitted to escape it. South Africans are required to sit at home rather than accept a job for less than R2 491 a month in the private sector.

Finally, the services paid for by taxpayers are broken. In fact, they are so broken that after paying the government, taxpayers pay the private sector again to actually deliver them the services they need – private security, private healthcare, private education, private transport, etc.

This is the legacy of the ANC’s ‘developmental state’ ambition.

The South African economy requires a radical reorientation from state ambition towards giving power to the people.

South Africa already has the natural endowments, entrepreneurial talent, and ideas to drive an economic renewal, but it requires a government willing to unleash it.

A growing economy enables us to provide better and more meaningful welfare support to the poor and the unemployed – the kind of support that actually gives you an opportunity to escape poverty and become independent. Not support so paltry, important as it is, that it keeps recipients trapped in a cycle of government-induced poverty. A basic income becomes more and more feasible in the context of a growing economy where fewer people would be out of work.

If South Africa continues with state ambition over giving power to the people, we will forever be trying to do more, but with a declining base of taxpayers to provide the revenue needed to fund more.

Changing direction will not be easy. South Africa has built up significant momentum towards economic ruin. It can be done, but it requires tough choices to overcome inertia.

The document we release today highlights the tough choices South Africa needs to make in order to give power to the people.

SAA:

The SAA bailout is why this budget is ultimately bound to disappoint. It represents the failure of the ANC to make the choice to move away from state ambition to giving power to the people.

Besides insiders and vested interests, there is no one left in South Africa still trying to make a case for why SAA should be bailed out again. The ANC does not even try to make a case for it.

And yet, another bailout is coming. R10.5 billion, on top of R16.4 billion in February.

This is perfectly symbolic of the choice of ‘state ambition’ over empowering people.

It is a morally indefensible choice to make.

In the context of the scale of financial stress and personal suffering faced by so many South African families right now, spending should be prioritized for protecting essential services, or providing greater relief.

This is the choice being made:

  • R10.5 billion could fund, on average, a little more than one additional month of TERS support for families who are still not earning their full pre-lockdown salaries.
  • R10.5 billion represents 130 new schools
  • R10.5 billion represents over 1.5 times the entire annual budget of the National School Nutrition Program
  • R10.5 billion represents over 80 000 education degrees.
  • R10.5 billion represents 13 new 300-bed district hospitals.
  • R10.5 billion represents over 440 new green community clinics.
  • R10.5 billion represents over 27 000 medical degrees.
  • R10.5 billion represents over 66 500 RDP houses.

That is the choice the ANC is making: SAA above SA. State ambition above empowering people.

More than R65 billion in public money has been given to SAA since 1999, without anything to show for it. The latest request for R10.5 billion to “restructure” the company will push the assistance given to SAA over the R75 billion mark.

Western Cape Premier Alan Winde summed it up perfectly this week when he said “…we don’t need state funded planes, but we do need working trains…we don’t need chicken or beef being delivered in the skies to those who already have an income. But what we do need is good nutritious food delivered to our children so we can eradicate extreme hunger”.

And that is why we are so committed to raising public awareness about how wrong this choice is. We will continue to escalate our campaign against this bailout – both in the hope of stopping it, but also so that the ANC is held accountable.

#Jetgate: Until proof has been produced, we cannot trust payment was made

The Democratic Alliance (DA) has taken note that the ANC cannot provide proof that they paid back the money incurred when they abused an Air Force jet to travel to Zimbabwe to meet with ZANU-PF.

Until proof of payment has been produced, we can only assume that the payment was never made.

In response to a DA parliamentary question, the Minister of Finance, Tito Mboweni, confirmed said that that “[any] revenue due to the state flows to the National Revenue Fund (NRF) through departments concerned before it is surrendered to the NRF. As it stands, the Department of Defence is still working on the matter and will inform the National Treasury accordingly once the matter is finalized.”

The DA wrote to Minister Mboweni earlier this month to ascertain whether he was consulted by the Minister of Defence and Military Veterans, Nosiviwe Mapisa-Nqakula to determine a reasonable amount the ANC must pay back for abusing State resources.

Since Treasury has not yet received the payment and the ANC cannot produce any proof thereof, Minister Mboweni should use this as an opportunity to ensure that proper costing is done to ensure that the State is paid in full by his party.

The ANC says that they do not “owe” the DA proof of this payment.  What they do not seem to understand is that they “owe” every single South African taxpayer proof that they paid back the money.

The ANC’s response to our call for transparency is typical of their disregard for any accountability.

The facts are that an ANC delegation completely flouted Treasury and Defence regulations when they travelled to Zimbabwe on board a Falcon-900 jet. This was a flagrant abuse of State resources and their refusal to produce proof is a slap in the face of the taxpayers who had to foot the bill for this abuse.

New SAPS Amendment Bill an unconstitutional power-grab that must be opposed

The Democratic Alliance (DA) notes the publication, for comment, of the draft South African Police Service Amendment Bill. We believe that this draft Bill is, at best, flawed, and at worst represents an attempt to affect an unconstitutional power-grab by the Minister of Police, Bheki Cele. We will oppose this Bill with all the means at our disposal.

Ironically, the Bill professes to align the existing South African Police Service Act (SAPS Act) with the Constitution, but in going about creating a “single police service” it erodes the constitutionally-mandated powers of provincial, municipal and community policing structures. The Bill in effect strips provincial and local governments of decision-making and planning powers, while requiring them to continue bearing the bulk of the responsibilities associated with policing in their areas, including assuming civil liability and taking care of funding and equipping. The Bill awards substantial powers to the Minister to interfere in provincial and municipal policing matters.

The DA is of the belief that policing should be increasingly devolved, not centralised. In order to effectively fight crime we need a police force that is nimble enough to adjust to the unique circumstances of each province or community, rather than a “one size fits all” bureaucracy in which crime fighting strategies, policies and priorities are determined nationally by politicians that are far removed from the daily realities of ordinary South Africans.

The DA urges members of the public to submit their comments on the Bill as a matter of urgency. Comments should be submitted by no later than 14 November 2020, and must be addressed in writing to comments.bill@csp.gov.za or by post for the attention Dr. PC Jacobs at Civilian Secretariat for Police, Private Bag X922, Pretoria.

The ANC government has consistently failed to combat crime effectively, and this Bill, by centralising powers at a national level, is a step in the wrong, rather than the right, direction.

Speech by Dr Ivan Meyer, DA Federal Chairperson, at Parliament on Sunday, 25 October 2020 at the Black Monday event

The following speech was delivered by Dr. Ivan Meyer, DA Federal Chairperson and Western Cape Minister of Agriculture, at a Black Monday event outside Parliament today. See photos here, here and here.

We are here today #ForTheLoveOfAgriculture.

We are here today #ForTheLoveOfFarmers.

We are here today in solidarity with our farmers, farmworkers – black and white, their children, and their families.

Farmers and farmworkers live in fear in South Africa.

We are here today at Parliament because the President and MPs deny that farmers and farmworkers are attacked and murdered.

Mr. President, wake up and smell the blood of farmers across South Africa.

Mr. President, our hearts are bleeding for our farmers across South Africa.

Mr. President, I have been to the scenes of farm attacks. Mr. President, it is not only attacks, it is the brutality of these crimes.

Mr. President these farmers are honest, hardworking men and women, and all they ask are STOP Farm murders now.

Mr. President, our farmers and farmworkers are the food basket of South Africa.

Mr. President, are you aware that South Africa’s agriculture is exporting 50% of our agri-products on the African continent.

A farm murder in South Africa directly impact the food security and political stability of the African continent.

As the Chairperson of the African Union, you should condemn farm murders in South Africa to protect food security on the African continent.

Mr. President, these farmers are your key to economic recovery in South Africa.

Without these farmers, there is no economic recovery.

Mnr die President, hierdie boere is die kosmandjie van Suid Afrika.

Ons vra dus

  • Stop plaasmoorde in Suid-Afrika;
  • Verklaar plaasmoorde as haatspraak in Suid-Afrika;
  • Verklaar plaasaanvalle en plaasmoorde as prioriteitsmisdade in Suid-Afrika;
  • Bemagtig SAPS in landelike gebiede met meer toerusting en hulpbronne om hul werk meer effektief te done;
  • Stel ‘n hofmoniteringseenheid (die sogenaamde Watching Briefs) in om plaasaanvalle effektief te monitor in kriminele regstelsel;
  • Ondersteun plaasbuurtwagte met hulpbronne, toerusting en elektroniese kameras om misdaad te voorkom;
  • Die boere vra vir belastingskorting op alle veiligheidsuitgawes wat hulle op hulle plase aanbring.

Mnr die President, boere, plaaswerkers, wit en swart, staan vandag hier voor die Parlement, en vra u as die hoof van die regering in die Republiek Suid-Afrika, kom ons stop plaasmoorde.

Dit kan nie langer so aangaan nie.

Een moord is een te veel.

Ons harte is seer vandag, want die mense wat kos op ons tafel plaas word wreedaardig in Suid-Afrika vermoor.

Suid-Afrika kom ons staan saam ons boere, plaaswerkers en hulle families.

Vir ons boere, alle boere regoor Suid-Afrika, aan die in die Vrystaat, Noordwes en Noord-Kaap wat brandstigting ervaar het, kom ons haal ons hoede af en handhaaf ‘n minuut van stilte.

Hier in die Wes-Kaap is ons boere ons landbouers en plaaswerkers ons strategiese vennoot.

In die Wes-Kaap dra landbou 11% by tot die ekonomie van die Wes-Kaap en daarom gaan ek nie plaasaanvalle en moorde duld in die Wes-Kaap nie.

‘n Aanval op ‘n boer en plaaswerker is ‘n aanval op die ekonomie van die Wes-Kaap en dit gaan ek nie toelaat nie.

Ek sluit af, Vandag, Ek salueer alle boere, landbouers en plaaswerkers regoor Suid-Afrika.

Ons boodskap is eenvoudig: Mnr die President, kry ‘n ruggraat en stop plaasmoorde in Suid-Afrika

Didiza’s published list of farms for land reform causes panic among emerging farmers

The plan by the Minister of Agriculture, Land Reform and Rural Development (DALRRD), Thoko Didiza, to release 700 000 hectares of “underutilised or vacant state land” for agricultural purposes could potentially prejudice emerging farmers after it emerged that some farms on the published list were already underactive agricultural production.

To prevent further panic and ensure that affected farmers get the requisite assurance to proceed with their preparations for the forthcoming agricultural season unhindered, the DA will write to Minister Didiza and ask that she:

  • provides clarity on why productive farms have been listed;
  • confirm whether existing farm occupants were consulted on the government’s intention to place the property on the list;
  • explain the reasons for listing a farm whose occupant already possesses a lease agreement; and
  • provide documented evidence of the reasons that informed the inclusion of each of the 896 farms on the list.

The DA is concerned that the criteria used by the DALRRD to identify ‘underutilised or vacant land’ may have been subjectively applied by Departmental officials resulting in the listing of productive farms.

One of the affected farmers is Mr. David Rakgase who, with the DA’s assistance, recently won the right to full ownership of his Nooitgedaccht farm in Limpopo after an 18 year battle with the government. Despite agreeing earlier this year to transfer full ownership of the farm to Mr. Rakgase, the sudden u-turn by the government to list his farm under the latest land reform programme is not only puzzling but now borders on vindictive victimisation of this elderly farmer.

Similarly, the Gwatyu community in the Eastern Cape recently discovered that their fight to have full ownership rights of their land has only resulted in its listing for possible land reform purposes on Didiza’s list. The Gwatyu case is particularly concerning because, despite being ignored for years by the government in repeated attempts to present their case, they now face the possibility of having their land parcelled out without consultation.

Deputy President, David Mabuza’s assurance in Parliament last week that no one will be forcibly evicted from the land is of little comfort to farmers who have spent years fighting for their right to land ownership. The urgent issue at hand is for Didiza to halt her ‘700 000 hectare’ programme until she has cleared the ongoing confusion on the targeting of occupied productive land.

Catastrophic oils spill endangers Durban’s fragile ecosystem

The Democratic Alliance (DA) is horrified by the catastrophic crude oil spill from a Transnet pipe into the Umbilo River. The crude oil has now meandered down to Durban Harbour and can be seen as far afield as Battery Beach in Durban Central.

DA councillors Melanie Brauteseth, Gavin Hecter and eThekwini Caucus Chief Whip, Thabani Mthetwa, conducted a brief oversight to the site of the oil spill and were greeted with the horrific site of thick black oil permeating the river and its banks. Spill-Tech were on-site to fix the pipe and contain the spill.

The already severely compromised Umbilo river ecosystem which has been the site of major sewage spills and industrial pollution now faces complete ecocide. The impact on the ecosystem, wildlife, and communities dependent upon the river is unknown at this point.

The DA will ensure that eThekwini Municipality and KwaZulu-Natal provincial authorities hold Transnet to account. An immediate investigation must be undertaken into the allegations of Transnet’s ailing pipeline infrastructure as the cause of the oil spill. An environmental assessment of the damage must be commissioned and a plan for the rivers’ rehabilitation drafted, in consultation with environmental experts, to save the Umbilo River.

The devastating impact of the oil spill could take years to remedy. A disaster of this scale should never have been allowed to occur and we must ensure there are no repeat incidents. The ongoing pollution of our waterways is a crisis that has been unfolding unabated in all of South Africa’s provinces for many years.

The DA has submitted a parliamentary question to the Minister of Environmental Affairs, Forestry and Fisheries, Barbara Creecy, requesting her department’s plan to address the ecocide of South Africa’s rivers. South Africa is a water-scarce country and we cannot afford the destruction of our precious fresh water sources that many communities depend on.

Minister Creecy’s department needs to urgently step in to assist provincial and municipal authorities to fulfil their mandate as there seems to be chronic incapacity to protect our rivers. Government must uphold the people’s constitutional right to an environment that is not harmful to their well-being, as well as the preservation of the environment for future generations.

The DA call on Minister Creecy to urgently convene a meeting with the Department of Water and Sanitation and the Department of Health to devise an emergency plan to save South Africa’s rivers. This is a necessity not only to protect our vulnerable communities and natural heritage, but is also an integral part of South Africa’s climate resilience strategy.

CoGTA Minister must declare State of Disaster for three provinces devastated by fires

The Democratic Alliance (DA) calls on the Minister of Cooperative Governance and Traditional Affairs (CoGTA), Dr Nkosazana Dlamini-Zuma, to urgently declare and gazette a state of disaster for fire-ridden areas of the Free State, North West and Northern Cape.

More than 200 000 ha, by last estimation, have already been destroyed by fires on farms in these three provinces. The DA has received reports that farmers and volunteers were still battling blazes at 04:00 this morning, with the strong wind fanning the flames and making it extremely difficult to extinguish.

A declaration of a state of disaster will enable the South African National Defence Force (SANDF) to be on standby to immediately assist when the fires flame up again and make helicopters and other vital equipment needed to fight these fires, available.

At the moment farmers and volunteers have to drive for kilometers on end to refill their water tanks in order to fight the fires. And there seems to be little help from municipalities in combatting the flames, leaving members of rural communities to face the danger and destruction on their own.

While the parliamentary portfolio committee on Agriculture, Land Reform and Rural Development has called for Agriculture Minister Thoko Didiza to declare a state of disaster, this unfortunately falls outside her mandate. The DA calls for Minister Didiza to engage with the Minister Dlamini-Zuma as a matter of urgency to ensure that a state of disaster is proclaimed immediately so those affected can get the help they need to combat the fires urgently. Farmers must also be assisted with water and feeding for their animals and the restoration of infrastructure on the farms.

The purpose of a state of disaster is to provide immediate crucial aid, after all. Something that these provinces are in dire need of. But while the Ministers are taking their time, people and animals’ lives are in danger and thousands of hectares of land are destroyed daily.

On 23 June 2020, the DA asked the Free State provincial government to assist farmers in the event of fires. “Government should use resources at its disposal to assist farmers during times when they are most vulnerable, such as during droughts and fires.” Intervention from government is essential to these exact disasters, volunteers in the Free State, Northern Cape and North West are currently facing on their own.

The DA is undertaking oversight inspections to these three provinces in the next three days to engage with farmers and volunteers locked in combating the disaster and to investigate claims that some South African Police Service (SAPS) stations are refusing to open cases of arson in these areas. The allegations that these fires were deliberately set need to be thoroughly investigated, and we welcome the arrests that have been made in this regard so far.

Yesterday, the DA laid criminal charges against the EFF Member of Parliament, Mbuyiseni Ndlozi, for incitement to arson following a song he sang in Senekal translating to “call the fire brigade, burn these Boers”. We take the incitement to commit property damage and possible injury to life very seriously.

Farms being set alight does not just affect the farmer and farm workers on these farms. These fires will have wide-reaching economic and food security impacts that will affect South Africans all over the country and from all walks of life.

Some of these farmers are still reeling from the drought that have plagued areas in South Africa for seven years and still not a cent of the R35 million given for drought relief in the Northern Cape have been spent to assist the farmers there.

While government is cooling it’s heals and turning a blind eye to the destruction, lives and livelihoods are going up in flames.

#Jetgate: Did the ANC pay back the money? The DA wants proof

In response to a Democratic Alliance (DA) parliamentary question, the Minister of Finance, Tito Mboweni, has confirmed that that the State has not yet been reimbursed by the ANC for their junket to Zimbabwe onboard an Air Force jet.

The Minister said that “[any] revenue due to the state flows to the National Revenue Fund (NRF) through departments concerned before it is surrendered to the NRF. As it stands, the Department of Defence is still working on the matter and will inform the National Treasury accordingly once the matter is finalized.”

Minister Mboweni’s response to the DA seems to contradict the ANC’s confirmation earlier this month that it had in fact paid back R105 000 to the Department of Defence and Military Veterans.

The facts are that the ANC delegation abused public funds to illegally travel to Zimbabwe and back aboard the Air Force’s Falcon-900 aircraft. With the aid of Minister Nosiviwe Mapisa-Nqakula, the ANC flouted Defence and Treasury processes and disregarded level 2 lockdown regulations for their own party-political ends. They simply cannot get away with a slap on the wrist and must repay every cent.

The DA now challenges the ANC to release a proof of payment for the reimbursed funds. If they have nothing to hide then they would easily release the proof before close of business today.

DA welcomes Deputy President’s commitment to discuss our R75k solar tax rebate proposal as a step forward

The Democratic Alliance (DA) welcomes the commitment from Deputy President, David Mabuza, that he will discuss our proposal of a R75 000 tax rebate for households wishing to install a rooftop solar system with the Ministers of Finance, Public Enterprises and Mineral Resources and Energy, and apply his mind to seriously implementing this. He made this commitment during the parliamentary question session on Thursday.

The DA first made this proposal as part of our contribution to the budget process in 2019, and the recurrence of loadshedding has made it more necessary than ever. A fully costed proposal was prepared, and submitted to National Treasury. We will now resuscitate this and submit it to the Deputy President as he has requested.

We estimate that it will cost in the region of R4 billion over 3 years, and reach approximately 100 000 households. The estimated saving in electricity is 480MW. The proposal thus eases demand on both the grid and Eskom, boosts the local economy and lowers the risk of loadshedding. Given that loadshedding is estimated to cost the South African economy R1 billion per stage per day, it is clear that just two days of stage 2 loadshedding would more than justify the expense.

Deputy President Mabuza undertook to study the DA’s proposal, and discuss it with his Cabinet colleagues, before reverting to us in writing. We will hold him to this commitment, and look forward to further constructive discussions that can alleviate South Africa’s energy crisis.

Click here to read more about the DA’s plan to drive the cost of electricity down, introduce competition into the energy sector, and diversify the country’s energy sources to introduce more renewables, as well as our record of action on the electricity crisis over the last 8 years.

Mboweni admits R70 billion IMF loan “could be used for salary payments” for ANC cadres

Minister of Finance, Tito Mboweni, appears to have abandoned the position he took in his February budget presentation to rationalise the unsustainable public wage bill, and is now willing to use debt to finance salary payments to government employees.

Responding to a parliamentary question on whether any portion of the $4.3 billion loan granted to South Africa by the IMF will be used to pay the salaries of public servants, Mboweni conceded that “the loan receipts (or disbursements) will form part of the National Revenue Fund to be used to support existing government programmes, which could include salary payments.”

This sudden change by Mboweni from his avowed position of prudential public financial management to debt fueled public spending is hardly surprising. It is now public knowledge that his economic reform crusade has been rejected outright by his Cabinet colleagues who have repeatedly shown a willingness to send South Africa over the fiscal cliff through unrestrained spending.

For years now, the consensus among International Financial Institutions (IFIs), rating agencies, economists and even some in Treasury itself is that the country’s public wage bill had become unsustainable and needed to be cut to prevent a budget blow out. Initially a strong proponent of this position, Mboweni now seems intent on appeasing the trade unions by acceding to their demands for additional spending on the public wage bill.

By admitting that the IMF loan could be used to pay salaries, Mboweni has reneged on the spending commitments he made in his Letter of Intent to obtain financial support under the IMF’s emergency financing instrument. The LOI committed government to use IMF emergency assistance to support health and frontline services, solve the balance of payments problems caused by the pandemic, protect the vulnerable, support economic reform, drive job creation and stabilise public debt.

As Mboweni gets ready to present the Medium Term Budget Policy statement in a week’s time, his failure to hold the line and defend the public purse from marauding political interests in his own party will have far reaching consequences on South Africa’s long term fiscal stability. The reality is that the country’s unprecedented high budget deficit and debt levels are only set to get worse as a result of an unending appetite for more debt.

The DA has already written to the IMF to register our strong objection to Mboweni’s intention to spend another R10 billion on bailing out South African Airways. In our next correspondence with the IMF, we will similarly inform the Fund that Mboweni has now decided to abuse the $4.3 billion loan to pay salary increases for ANC cadres.