There is no 'endless supply of cash' Mboweni tells Parliament

2019-02-21 14:05 - Lameez Omarjee
Tito Mboweni, South African Minister of Finance wa
Tito Mboweni, South African Minister of Finance walks with members of the Finance Ministry up Government Avenue to deliver his medium-term budget speech on October 24, 2018. (RODGER BOSCH/AFP/Getty Images) ~

Finance Minister Tito Mboweni told MPs on Thursday there is "no endless supply of cash" in government, and the state has no printing press to magic new funds. 

Following on from his maiden Budget speech on Wednesday, Mboweni told a joint sitting of various oversight committees that the biggest risk to the fiscus were state-owned enterprises and the public sector wage bill. 

With SA facing low economic growth, demands for social needs and public services far outweigh government's revenue. The low economic growth informs revenue collection projections, Mboweni explained.

"Demands for expenditure far outweigh revenue," he said. "What I think I find surprising - is that no matter how many times one explains the constraints that we face on the income side, the demands on the expenditure side do not moderate," Mboweni said. 

On Wednesday, Mboweni announced that troubled state power utility Eskom would be receiving a cash injection of R69bn over three years in order to help it honour its debts. 

On Thursday he reiterated that if state-owned companies like Eskom, Denel, SAA and the SABC want more money, government will appoint a 'chief reconfiguration officer' in the same way a curator is appointed for a bank which is in trouble.

"Government will be strict because we want our resources to be properly looked after."

Speaking about Eskom, Mboweni said government wants to see "concrete measures" as it undergoes an unbundling into three separate entities encompassing generation, transmission and distribution.

"In the process, we would probably see more competition in the generation side which would benefit consumers," he said. 

The unbundling, which has been criticised by some unions, was announced by President Cyril Ramaphosa in his State of the Nation Address. The three entities would all still fall under Eskom. 

Treasury Director-General Dondo Mogajane told MPs that if Treasury had to strip out financial support for Eskom, then SA's fiscal consolidation path would bear fruit.

"Without Eskom, our fiscal consolidation would be credible."

Speaking about the public service wage bill, Mogajane said Treasury has been in discussions with the department of public service and administration about "meaningful interventions".

Government has targeted between 16 000 to 30 000 employees over the next three years to take early retirement without incurring penalties in order to shrink the state's wage bill. 

In his concluding remarks Mboweni raised concerns over the escalating debt, expected to stabilise at 60.2% of GDP by 2023/24.

The finance minister said SA needs to reduce its debt downwards to less than 40% of GDP.