Finance Minister Tito Mboweni literally threw the cat among the pigeons during his Budget speech last week.
Mboweni left trade unions spitting over the proposed plan to cut public sector wages by around R160billion over the next three years to contain a rising budget deficit.
So international rating agencies were not unreasonable to be sceptical that Mboweni will get the public sector to toe the line.Fitch too, said the Budget highlighted the severe deterioration in public finances and the long-term policy challenge of stabilising government debt. However, the reality is that the businesses housed in these flashy façades are struggling. They have been slashing staff and cutting costs to the point that they are withdrawing from the country. Many workers haven’t seen an inflation-based salary increase since the days of that fated dodo. Small businesses are failing too.It is also not happy that civil servants believe that their jobs should be guaranteed for life.
Now the jury is out on how the ruling party will handle the situation as it heads into yet another meeting to discuss the impasse.The National Treasury has recently repeatedly warned South Africa that if it doesn’t get its debt under control, we may have no choice but to apply for a bailout from the International Monetary Fund as the country’s spending outweighs the revenue received.
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