South Africa is heavily indebted but not to the extent that Japan, USA, Brazil, India and Australia are. Australia's population, for example, is half that of South Africa. Each Australian, however, carries the responsibility for R242 370 of the national debt according to the Global Debt Clock. Presently, each South African citizen carries the responsibility for R67 337 of the national South African debt according to the same clock found on The Economist website.
There is a lesson for us in the above comparison with our chief cricket opponent. We must exert pressure on the ruling party to stop making the national debt burden too onerous on us. It must do so by giving full support to the Pravin Gordhan, improving its image by dealing decisively with Zuma and by getting its policy responses right. Its failure to act timeously will make a downgrade inevitable. When that happens, it will serve as a stinging rebuke to the Zuma administration. If the downgrade occurs before the local government elections, extremely hard pressed South Africans will turn against the ruling party during the local government elections.
In the view of the IMF, one of the main risks to the South African economy, in the absence of telling government measures, will be "a prolonged halt to capital inflows" into South Africa. While investors remain edgy and skittish, our country will struggle to finance the current-account shortfall without the inflow of capital from outside. The rand will depreciate further and costs of all items, including food, will continue to rise to the detriment of ordinary people.
The ANC cannot escape blame for the economic predicament in which we are. We certainly have a government that is too big for taxpayers to support any longer. The ANC has also been reckless in awarding above-inflation wage increases. To add to that, the ruling party allowed the public sector wage bill to double as a result of taking on an additional 250,000 civil servants in the past few years. Zuma has been buying support and loyalty left, right and centre at a grave financial cost to the nation. What he has done is most definitely not sustainable.
Government, as COPE has consistently argued for the past seven years, is too bloated, too inefficient and too costly. Government cannot be the main jobs creator. To fund all the extra posts in the expanded cabinet and all the extra staff that goes with the creation of new departments, the ruling party has relied on extravagant borrowing and kicking the can down the road in respect of reducing that debt. With the national debt now standing at R2-trillion, the annual interest is a whopping R116-billion. The cost of servicing past budget deficits has now become the fastest-growing item in the National Budget. Fiscal space has therefore continued to narrow with serious implications for service delivery and social cohesion.
The ruling party simply has to reduce spending-growth significantly, especially on the consumption side, to reduce our country's budget deficit to levels that the taxpayers can sustain. Every election offers an opportunity to citizens to punish a ruling party for heavy consumption side expenditure that offers no real stimulus to the economy and which only adds to the burden of the nation in a multiplicity of ways.
COPE calls on South Africans to stop Zuma from continuing to pile debt on their shoulders without any corresponding benefit for them. They can do so by withdrawing electoral support for the grossly misbehaving and reckless ANC. A bitter dose of medicine for the ANC will sweeten circumstances for the rest of us who are not at the feeding trough.
Dennis Bloem
COPE Spokesperson
0824515718
