Clear policy essential to turn around financial crisis

Finance Minister Tito Mboweni                                          Picture: ESA ALEXANDER

Finance minister Tito Mboweni has made it clear that  SA is in debt. But this is not new information. Our debt did not just drop from the sky in 2020. It is a result of years of uncontrolled spending.

What is now needed is a clear policy on how to get out of the mess. More borrowing is not the answer, especially from the World Bank and IMF as it is very difficult to fully pay such loans. Reducing our debt has to begin with an identification of where the money has gone to and it’s common knowledge that corruption is at the centre of our financial problems.

Through corruption billions of rand have been siphoned out of the economy and into private hands. President Cyril Ramaphosa has laid down the guidelines on the recovery of stolen assets using a revamped NPA with skilled and experienced leadership. The jury is still out on its success.

We hope  the recent VBS Mutual Bank indictments are the beginning of more arrests of people suspected of misappropriating public funds. But the NPA requires an adequate budget to carry out its mandate.

The other problem Mboweni did not address is the  impact of illicit financial outflows on our economy which lead to a budget deficit. According to the World Bank Asset Recovery report less than $150bn [R2,6-trillion] was returned between 2010-2012, with billions still outstanding. These illicit outflows are one “hippo” we should be chasing down the river with all our vigour.

Mboweni also stayed away from the unpopular issue of spending cuts. But we cannot continue kicking the can down the road. The public service wage bill should be  trimmed and provinces consolidated. Our state enterprises need to improve their collection of user fees.

By Wongaletu Vanda, via e-mail

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