At the core of this year’s Budget proposals from South Africa’s National Treasury is the admission that national debt is no longer expected to stabilise, says the writer.
In previous years, bar one brief exception, Budgets and medium-term Budgets repeatedly promised that debt would stabilise even as previous years’ promises were broken.
Population growth is estimated to be 1.4% a year, meaning that economic output per person is declining. In that sense, South Africans are getting poorer. Meanwhile, at the policy level, the proposals suggest “structural reforms”. These are needed to increase economic growth, without which only more pain will follow in subsequent years.
Its proposal on a wage reduction was formally put to unions only the day before it was tabled. Not only does this proposal imply immediate pain for workers and the economy, but it also serves to undermine the role of workers and unions in deciding the restructuring and future trajectory of SOEs.
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