Can Gigaba steer SA out of a crisis?

Tomorrow is the day of reckoning for fledgling Finance Minister Malusi Gigaba. As he tables his first (mid-term) budget, he will be setting the story straight about where he stands on the matter of ensuring this country’s progress.

He will either confirm the doubts and fears of many that under his watch the Treasury will become a free for all for those who seek to manipulate the state for their own benefit. Or he will prove that he has the capacity to lead a strategy to rescue the economy from its downward trajectory.

Given the constraints to tax revenue, Gigaba needs to steer clear of announcing more state expenditure, particularly without an improvement in government departments’ management of procurement processes.

In any case, the country’s tax base is not growing. And the very small percentage of taxpayers who are bearing the burden are already stretched beyond the limit.

This calls for ingenuity on the part of the minister and his team to create an atmosphere for the resurgence of the economy by inspiring both consumer and business confidence.

Focus should be on fiscal consolidation and discipline. The finance minister must show the courage and fortitude to rein in fruitless expenditure and to break the culture of bailouts for failing state-owned enterprises (SOEs).

The country cannot afford to continue on the path of amassing debt without creating growth that ensures the sustainability of such financial commitments.

The debt to gross domestic product (GDP) ratio, including government guarantees to SOEs, is just over 60% of GDP.

This is unsustainable and poses a risk not only in the present but for the next generation that is likely to inherit this debt.

There is an urgent need to address the rate of unemployment, the highest it’s ever been since the dawn of democracy.

Along with the 17-million people who depend on (social) grants it is clear that something needs to be done urgently to unleash the potential of this country’s people who are its greatest asset.

Will the finance minister step up to the plate or will his budget speech bring about greater foreboding leading to further ratings downgrades and deeper economic crisis (than we face at the moment)? We’ll soon find out.