[There's lots of good stuff in here. Everything is out of control, and the Govt is just borrowing insanely and just propping up one failed thing on top of another including bailing out our national airline yet again. Everything is failing, and these blacks are totally dependent on just BORROWING and SPENDING. And it isn't working. You see, the key issue has to do with skills and efficiency which these blacks always ignore. They also have no solutions and any solutions they peddle are just pure nonsense. So what is the solution? There is none. So here's what will happen: The blacks will just go around begging for more money, more loans and cuts in interest rates. But how much can they be funded for their own inefficiency? Another hidden factor is this. The blacks have other insane problems that are not discussed but which I'm aware of from Zimbabwe. They have got serious internal loyalty problems among themselves. Robert Mugabe of Zimbabwe was forced into solving the disintegrating loyalty problem by giving out farms, businesses and lots of money to Generals, Police commanders and politicians. This is a critical (but not the only) source of corruption. Now the blacks in South Africa are sitting with the same problem and solving it the same way. Plus the communist ruling party the ANC is split. And the 2 parts are determined to keep the party alive, while taking turns to assassinate leaders on the other side. So the pigs are all rushing to feed at the trough for many reasons including loading up on cash to fund their own greed and power hunger and their secret groups of murderers. All these pigs feeding at the trough are of course a huge strain on the country's economy. Then also, you have the blacks loading up govt and private institutions with all their bum chums, handing out jobs and giving them big pay increases. All this adds to tremendous inefficiencies. Thus there is no real solution except collapse. But I'm sure the Jews/Liberals/Marxist and assorted shit will do their utmost to keep getting ever more loans and cuts on interest rates for the Govt. But how long this can go on I don't know. It seems we're getting pretty close to defaulting which will be a first in South African history. Then people are in for some shocks. All these anglo-Jew-loving whites and others who think in terms of economics only will discover that THE MONEY CAN DRY UP!!!! We're in really big trouble. Just yesterday I was at a shopping centre and I saw some Police anti-riot vehicles blocking off a road. Then I saw the EFF (Julius Malema's commies) protesting. They had T-shirts saying they wanted JOBS and LAND – from whites of course. None of these solutions can work. If you are inherently and fundamentally totally inefficient nothing can save you. Too many pigs at the trough and you have a problem. The ratings agencies have been becoming ever more skeptical about South Africa in recent years and all have put us more or less at junk status. I'm happy if we hit the wall. It will shock all the remaining whites who believe in the ECONOMY … Its time for serious problems to hit and to shock the idiots across this country. I say: TORPEDO THE SHIP! SINK IT. Whites are the only people in the country who can save this country. I believe that when the SHTF that the whites will finally save themselves. People need to realise that politics is not a game. That enormous problems can come from it. I have said many times that the worst idea ever conceived was black rule. Of course Jews promoted it like crazy and ensured that the blacks got access to vast amounts of money and credit that the whites were denied during white rule. This is fantastic. We need to hit the wall hard because that is the only way that some sanity can come to this country. The whites are capable and I think it will drive us together. I have been watching various things here and I have begun to seriously fear certain financial trends here. In recent months I have been thinking about taking serious actions myself in preparation for this situation getting bad. It looks as if we're going to hit the way. Also, I notice that they are saying that "recovery from COVID" will take up to 5 years. That confirms what I was fearing. In fact I think there will be no recovery from COVID because whatever damage has been caused is of such a nature that we'll be struggling to keep ourselves going, never mind getting back to where we were. We're going down and there's no return from this. But I'm a firm believer in accelerationism. Worse is better and let's hit the wall at full speed. It will shock everyone. There will also be some non-whites – yes non-whites – professionals of the middle class – who will actually FLEE!! As will some Jews. I like this all. Let the torpedo hit South Africa. It's the only way to save the whites and build white unity. Jan]
Government is borrowing at the rate of R2.1 billion a day, a rate that puts us on a path of potential default. Finance Minister Tito Mboweni warns that SA has to avoid the fate of countries such as Argentina and Ecuador that defaulted on their sovereign debt this year.
The massive growth in SA’s national debt – expected to reach R5.5 trillion in 2023/24 – overshadowed all the good things Mboweni referenced in his budget speech, such as projected growth of 3.3% in the next fiscal year, the R100 billion set aside for job creation and the lack of tax hikes – for the moment.
The rand responded negatively to the budget address, weakening to R16.50/$ before rebounding to the high R16.30s as the market continued to focus more on global events and sentiment than local factors.
Following the speech, local bonds were about 10 basis points weaker, though part of this relates to global sentiment that was negative towards emerging markets generally.
“With government debt remaining elevated and economic growth remaining subdued, the market demonstrated scepticism of the minister’s optimism and the green shoots he is witnessing in the economy,” says Bianca Botes, executive director at Peregrine Treasury Solutions.
“While there is commitment from Treasury to ensure economic growth, bolster employment and enhance the ease of doing business with South Africa, a concrete plan of action still needs to be provided and successfully implemented,” says Botes.
Mike van der Westhuizen, portfolio manager at Citadel, says the spiralling government debt is a concern, and the period required to return to budget equilibrium (zero primary deficit) has been pushed out from three to five years. “All of this is dependent on several things which are uncertain at this stage, including whether the state can get its public sector wage bill under control, and that’s already in doubt, and whether infrastructure spending will pan out as intended. That, too, carries considerable execution risk.
“Overall, there doesn’t seem to be a concrete plan to get us out of the fiscal mess we are in.”
There were some glaring omissions from his speech, according to a reaction report from Anchor Capital. “Nothing was said on … increasing taxes. We note that in June, Mboweni said he had no plans to raise taxes at present and we would presume that this still holds.”
Not unexpected, but SAA’s fresh bailout of R6.5 billion to settle its guaranteed debt and interest bill of R10.5 billion (on top of the more than R16 billion awarded earlier in the year) was not well received by opposition parties and economists, many of whom have argued for a cut-and-run approach to the ailing airline.
The SAA bailout will be paid for out of cuts in basic service provisions.
This sets an uncomfortable precedent with regards to the government’s handling of problem state-owned enterprises, says Anchor Capital.
“Interestingly the Land Bank requires a further R7 billion bailout – this is quite sizeable when considered against their R2.2 billion of bonds in issue and previous bailout of R3 billion.”
Debt-to-GDP is now expected to stabilise at 95%, which is more realistic than previous assumptions of around 80%.
Good parts of the budget
Government reiterated its commitment to reduce spending growth, shift spending patterns and stabilise the debt-GDP ratio in the medium term. Positively, the projected fiscal consolidation is not premised on unduly optimistic revenue expectations or excessive tax hikes. Furthermore, economic growth estimates for 2021 (3.3%) and 2022 (1.7%) are more on the low side – thus leaving scope for a positive uptick, says Anchor Capital.
The majority of the government spending cuts are coming from the wage bill, and the deficit for 2020 remains as set out in June.
Government has so far been surprisingly committed to the wage bill savings, supported by the strong public sector wage growth in recent years and the context of severe pressure on private sector employment and income during the current economic crisis amid the Covid-19 pandemic.
However, in what forms some of the most positive aspects of the speech, the finance minister categorically ruled out prescribed assets and spending on debt to try stimulate the economy.
The wage bill
Daniel Silke, director at Political Futures Consulting, told the SABC that the minister of finance had to sell his proposed cost-cutting programme to the trade unions, a task fraught with difficulty.
Public sector salary increases have averaged 7.2% a year over the last five years, and it may be a difficult sell to get this within Mboweni’s projected inflation of 3% for 2020.
Opposition parties saw little to celebrate in the budget, arguing that Covid could not be blamed for where we find ourselves. Rather, a decade of financial mismanagement has pushed government’s back to the wall, where it is now borrowing abroad to cover its spending – which has a habit of coming out significantly higher than forecast, while tax revenues typically undershoot.