SACP response to the Medium-Term Budget Policy Statement
24 October 2018
The South African Communist Party has noted the Medium-Term Budget Policy Statement presented on Wednesday, 24 October in Parliament, Cape Town, by the Minister of Finance Tito Mboweni. The Medium-Term Expenditure Framework (MTEF) that the Minister outlined is constrained by the conditions of the technical recession that has gripped the South African economy and an economic outlook that has been revised downward.
The corruption of corporate-capture of the state, including looting, as well as the associated governance decay, mismanagement and maladministration, have severely impacted public resources and by no small measure contributed to the multiple crises in which our revenue and state owned enterprises were plunged. Neither is the international context favourable. Decisions taken and developments taking place as far as the United States impact developing country economies. South African economy is not an exception.
The SACP is therefore not in denial about the difficult economic situation in which our country finds itself. However, we need to ensure that, in approaching this crisis, we do not choke off any prospect for real job-creating recovery through excessively conservative macro-economic policy, or the short-term disposal of key public assets. The SACP notes the announcement made by the Minister of the plan to reconfigure state owned enterprises, and will engage both with the Alliance and the government on this and other strategic economic questions. If personnel budgets come under scrutiny, then it is the bloated, over-paid top management structures that must be targeted, not the tens of thousands of honest and hard-working rank-and-file workers.
State owned enterprises have an important role to play driving the imperative of democratic national transformation and development. They must be governed and managed properly in order to thrive, and require a favourable operating environment. It is therefore crucial to review their regulatory framework and remove all aspects that hold them up while advantaging private corporations.
On a broader canvas, the SACP calls for a sober but urgent debate on the appropriateness of our current macro-economic policy.
At present, the debate is dominated by the challenges of our fiscal constraints and the debt risks in our state owned enterprises. But the majority of South Africa`s debt is denominated in our own sovereign currency; it is rand-denominated, unlike some other developing countries in our peer group. This suggests that there is at least some lee-way for the state to innovatively leverage and direct resources into key development finance institutions which must be released to further investment in the productive sector of the economy and thus drive democratic economic transformation, inclusive, employment-led growth.
The MTEF makes a welcome attempt under the circumstances at giving practical expression to the key interventions that were announced recently by President Cyril Ramaphosa, mainly involving reprioritisation and re-allocation of resources to apex priorities in order to expand production. These measures include continued infrastructure development commitment.
The SACP further welcomes the statement made by the Minister on VBS Mutual Bank that all those who benefitted illegally from the proceeds of the "Great bank heist" must be locked up in prison after a fair trial.
It is important to foreground financial sector transformation in dealing decisively with the looters. The workers and generally the poor of our country require a social banking architecture and system to address their plight. Commercial banks controlled by private finance monopoly capital are not meant to serve but exploit the people financially. The working class needs universal social emancipation, including from the capitalist financial exploiters.
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