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The Africa Confidential Blog

  • 21st February 2019

South Africa's most political budget

Blue Lines

The gargantuan numbers aside – state power company Eskom has unserviceable debts of 420 billion rand (US$30bn) – the most pressing equation in South Africa's budget is a political one. Ahead of national elections on 8 May, President Cyril Ramaphosa has to balance public demands for better services and more jobs with fixing gaping financial holes in the state sector and taking on enough new loans without overwhelming the economy.

Finance Minister Tito Mboweni, whose enthusiasm for market economics has grown exponentially in the past two decades, used his budget speech in parliament on 20 February to take another swipe at the country's ailing state-owned enterprises, weighed down by mismanagement, corruption and debt. Yet he has promised Eskom a 69bn rand bail-out over the next three years funded by public spending cuts, including job cuts.

Most conventional responses to the crisis that Ramaphosa inherited from Jacob Zuma pointed to a hard-nosed austerity programme and fast-track prosecution of beneficiaries of the many financial scams in government and business. Ramaphosa has done neither, soft-pedalling on austerity to avoid alienating the country's hard-pressed population, and shying away from speedy prosecutions of party functionaries. Ramaphosa is particularly anxious to keep the support of the trade unions, which backed him in the 2017 leadership contest but are set to oppose any public sector job cuts.

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