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Minister Tito Mboweni delivers a speech on the 2021 budget in Parliament. Image: GCIS
- Finance Minister Tito Mboweni has said he suspects a third wave of Covid-19 is looming that could devastate the economy more than the second wave.
- He said that it is urgent for South Africa to implement the reforms of the Economic Recovery and Reconstruction Plan.
- He said South Africa no longer had time to be embroiled in ideological battles when it came to reducing debt and the public service wage bill.
Finance Minister Tito Mboweni told members of Parliament on Thursday afternoon that while he expected a pardon, he knew in good faith that a third wave of the Covid-19 pandemic would likely hit South Africa soon, with possibly more catastrophic consequences than those of the second wave.
Mboweni was responding orally to parliamentarians’ questions in a virtual plenary of the National Council of Provinces when he warned that complacency among the general population and delays in implementing much-needed political reforms left South Africa ill-equipped to withstand a third wave. .
In 2020, the Covid-19 pandemic and the subsequent national lockdown, under which South Africa has lived for a year, left the country’s already battered economy in worse shape, further reducing growth projections and increasing unemployment.
Mboweni said that although South Africa needed to focus all its efforts on supporting the economy through President Cyril Ramaphosa’s Economic Recovery and Reconstruction Plan, he believed that a third wave could trigger lockdown escalations, undermining such efforts.
Downgraded ‘unfair’ ratings
“I think we should all keep our fingers crossed that the third wave does not come, but I think it does. I think we have learned a lot from when we are at level 5 to now at level 1, where we are learning some bad lessons. people believe that we are no longer locked up.
“I wish we could all cooperate to make sure that we all avoid the third wave. If it comes, it must be managed in a way that maintains economic activity.
“I have to meet with the rating agencies and I plan to tell them that it was unfair that they downgraded us in the middle of a pandemic,” Mboweni said.
Mboweni said the National Treasury was working closely with the Presidency to ensure that the government had a recipe for economic recovery that included low inflation, low government deficits, low levels of debt, high investment, openness of the economy, penetration of technology, good education and anti corruption.
“We have political stability, political certainty and we hope that economic factors will work with us. At the end of the day, the economy will not grow only because of the fiscus. We have allocated sufficient amounts for economic development, industrialization, agriculture, employment creation, infrastructure, innovation, science and technology. They are allocations of the system to drive growth. ”
– Tito Mboweni
Fourth wave?
Asked by Mpumalanga MP Dikeledi Mahlangu about the risk of a third wave undermining the Economic Recovery and Reconstruction Plan, Mboweni said the National Treasury was conducting regular assessments on every intervention in the plan.
“The release of spectrum will be a great benefit to the economy and will lend itself to the penetration of technology into the economy. The risks of Covid-19 are there for structural reforms. If we get a third or fourth wave, and I won.” I am not saying why, but I am concerned that we will do it, it will be worse than the second and that presents a risk of instability, “he said.
Mboweni told MPs that economic growth at the end of the day did not depend on the state, but on elements of a larger system. He said the government would have to involve the private sector in state goals, including a reliable electricity system, pro-growth investment infrastructure.
Western Cape DA MP Cathlene Labuschagne asked Mboweni if she was pushing for less control from her Cabinet colleagues to allow the Economic Recovery and Reconstruction Plan to have the best chance of success. Mboweni said he had no interest in getting involved in “ideological battles.”
“If we do the right thing and continue with the structural reforms and implement the plan, we have high hopes that we can recover, we can put ourselves in a better position. But we must avoid doing the wrong things,” he said.
In response to a question from DA MP of Northern Cape Willie Aucamp about the most recent sovereign credit rating downgrades from rating agencies, Mboweni said that he believed it was unfair for South Africa to be downgraded amid a pandemic, but still considered that the agencies were vital. .
“As long as we get bonds internationally, we cannot avoid rating agencies. National financial markets also react to ratings. Ratings are good as they act as a discipline mechanism,” he said.
He said sovereign credit ratings and investor sentiment were an important part of why the government needed to grapple with its debt, budget deficit and public service wage bill.
Mboweni rejected suggestions from opposition MPs that his ongoing conflicts with ANC alliance leaders meant that he was pushing an austere agenda in government, saying simply that “a budget of R2.02 trillion is not a budget of austerity”.
