POINT OF ORDER | Godongwana’s budget should calm, not inflame, SA’s febrile mood

As finance minister Enoch Godongwana delivers his budget speech on Wednesday, setting the GNU’s priorities for disgruntled voters, rebellious parliamentarians and anxious investors, pleasing any of these groups, much less all of them, will be difficult in a year overshadowed by highly contested local government elections. Usually, any budget speech is a raucous event marking one of the biggest days in South Africa’s political calendar. It embodies the country’s political and socioeconomic challenges.

Vulnerable groups that remain on a slippery slope are the middle-class and small businesses that have not yet benefited from the existence of coalition governments at the national, provincial, and local levels. Their position is already balanced on a knife-edge. It will remain so after this budget speech, unless Godongwana balances public finances, cuts on wastage, boosts investor confidence and redirects public investment into job-creating projects.

Political parties in coalition governments continue to differ over policy and legislative approaches to dealing with national challenges. Even more than usual, policy rehearsals filled much of the time in Godongwana’s diary to avoid the repeat of last year’s speech delivery postponements over the VAT increase. This year’s speech is expected to be full of significant fiscal changes, altered spending commitments and adjusted economic forecasts, most of them informed by volatile geopolitics and the positive outlook of South Africa’s resilient economy.

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I reckon it’s time to call it. The threat to politicise poverty and unemployment figures, national and household inflation and food insecurity figures, national and household debt and other socioeconomic statistics shows that the fears voiced in the run-up to the 2024 national and provincial elections were well-founded. The GNU is in serious trouble.

It is faced with serious constraints that have tightened over the past 12 months, with more money going to paying interest on debt and GDP growth too low to absorb the unemployed. The challenges are mainly a symptom of the difficulty in resolving low growth, high interest rates, disappointing public services responsible for improving public infrastructure, and historically high tax rates on goods that have augmented the public purse in difficult times. This speech must take the nation out of all vintage narrow party ideological positions, swinging between collected callousness and then flustered chaos.

It is all three-dimensional chess, to whisper to vulnerable households dependent on state social grants whose economic value is constantly eroded by high inflation. Godongwana’s previous references to higher-than-expected tax revenue collections and positive projections of VAT collection and corporate income receipts, on which the continued availability of state social grants depends, confirm that caution and inconsistency about the state of the economy is only pragmatism, which could turn to radicalism in an election year. Beyond that, the approach of political parties in the coalition governments to the annual budget speech preparations shows an almost eerie vacancy – not so much not reading the room as not being in the room at all. Political parties should square up to our socioeconomic crises by offering more than armchair commentary platitudes.

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