Structural reform is the only way to return to balanced budgets and debt stability in the medium term, write John Steenhuisen
Structural reform is the only way to return to balanced budgets and debt stability in the medium termAs finance minister Tito Mboweni prepares to present an adjusted budget next week, while staring into the abyss of a R250bn-odd budget shortfall, he will be acutely aware of how constrained SA’s options are.
With SA’s cupboard bare, we have to focus on spending on real services and protecting the poor. Vanity projects , nice-to-haves, and exorbitant salaries for top bureaucrats all have to be cut, to protect services. Structural reform is also the only way to return to balanced budgets and debt stability in the medium term. We cannot just accept runaway debt as a new normal, because it ultimately has to be paid for. Debt is not free.
But we cannot afford to delay much longer on other reforms, such as liberalising our inflexible labour legislation, closing or privatising most state-owned entities, and growing the productivity of the state by appointing and managing for performance. And we certainly cannot be entertaining such unrealistic notions as new nuclear projects or further bailouts to SAA.
In each case the pathology is the same: too much control is centralised in an incapable state. In each case the remedy is the same: decentralise control to harness existing capability, much of which is in the private sector, and build the capability of the state. Fixing our water system, for example, will bring health and environmental benefits. Fixing our energy and transport systems will bring more people into the economy and reduce air pollution. Cheaper data will enable people to get more things done remotely.
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