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Hill-Lewis hopes that Finance Minister Tito Mboweni will announce another bailout for the airline.
Silas Stein / Picture Alliance via Getty Images
- It is morally indefensible to rescue SAA at the expense of South Africans, says the DA.
- They expect Finance Minister Tito Mboweni to announce a R10.5 billion bailout on the MTBPS on Wednesday.
- The party is concerned about the gap between state revenue and spending, leading to a debt crisis.
It is morally indefensible to prioritize a long-awaited South African Airways (SAA) bailout over empowering people, DA deputy and finance spokesman Geordin Hill-Lewis said ahead of Wednesday’s Medium-Term Budget Policy Statement (MTBPS).
Hill-Lewis expects Finance Minister Tito Mboweni to announce another bailout for the troubled airline, to the tune of R10.5 billion, in what will be his third budget statement in an extraordinary year dominated by the economic effects of Covid-19.
READ HERE | Medium-term budget will not be popular: SAA must be addressed, warns Mboweni
Hill-Lewis said the Treasury and Mboweni must restore South Africa to a sustainable debt path and restore fiscal discipline.
“It is equally important to protect essential public services from deep budget cuts. These two goals are related. If we spend more on debt interest, we will have less to spend on essential services.
“And if spending is focused on wasteful projects and bankrupt state companies, there will be less for essential services.”
‘State-run economy’
Hill-Lewis said that South Africa’s economic recovery depends on a choice that the ANC must make: ambition of the state versus empowering the people.
“The ANC must abandon its ambition for a state-run economy, which is stifling the entrepreneurial talent of South Africans,” he said.
“The rescue of the SAA is the reason this budget is destined to ultimately disappoint. It represents the failure of the ANC to make the decision to move away from the state’s ambition to empower the people.”
Finance Minister Tito Mboweni’s medium-term budget policy statement will describe the fiscal problems that could hamper the president’s economic recovery plan. | @ End24 https://t.co/Vb0UGEicri
– News24 (@ News24) October 26, 2020
He said no one in South Africa is arguing why SAA should be bailed out. Again.
“And yet another bailout is coming. R10.5 billion, on top of R16.4 billion in February.
“This is a perfect symbol of the choice of ‘state ambition’ over the empowerment of the people. It is a morally indefensible choice.”
DA Finance Spokesperson Geordin Hill-Lewis.
News24 Jan Gerber, News24
Hill-Lewis said the consequences of failing to close what Mboweni calls the “hippopotamus” – the huge gap between government revenue and public spending – will lead to “a full-blown sovereign debt crisis that would see South Africa give way a part of political sovereignty to international lenders, whether they are based in Beijing or Washington. “
READ | SAA unlikely to survive after rescue, warns aviation expert
But more than that, it will also lead to much deeper cuts in all public services, hitting the poor mostly.
He said shutting the hippo’s mouth would require some difficult and painful decisions in the short term, notably deep cuts in the public wage bill and ending the cycle of perennial bailouts for bankrupt state entities.
DA’s four core expectations for MTBPS:
- The minister must show a credible path towards debt stabilization and, in the long term, towards debt reduction;
- The minister must commit to a formally legislated debt ceiling, ideally supporting the DA’s Fiscal Responsibility Bill;
- The minister must protect essential public services from deep budget cuts, focusing on cuts in the public wage bill and through a general reassessment of public spending; Y
- The minister must hold the line on bailouts to bankrupt state entities and must reject any further bailouts from SAA.
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