HILARY JOFFE: February's budget will be written in pencil, not ink

If the dice rolls [against them] the whole framework isnot credible’

17 January 2021 - 00:17 By Hilary Joffe

Finance minister Tito Mboweni is due to bring the national budget to parliament in little more than a month's time and seldom, if ever, has a budget's credibility been so in doubt even before it is tabled. That is, first, because of the politics of public sector pay. Mboweni's plan to put the lid on SA's spiralling debt burden and stabilise the public debt at 95% of the size of the economy between now and 2025/2026 rests almost entirely on a freeze. October's medium-term budget pencilled in R300bn of spending cuts over the next three years from April 1, but that hinges on R274bn of cuts to the public sector wage bill - effectively a pay freeze.

The trouble is that all of that has yet to be negotiated between the government and the public sector trade unions. That's not going to happen in the next month, and chances are it won't happen at all, or certainly not on the scale the budget projects. Budget-busting wage deals are not new - the deals the government has agreed with the unions since 2009 have usually ended up costing more, sometimes substantially more, than the finance minister's budget projections. But never before has there been such a wide gap between the average 1% increase envisaged in the budget for the next three years and the inflation plus a couple of percent or more that the unions have been in the habit of winning in wage talks...

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