Government won't balance R4.4 trillion medium term budget on the backs of the poor

01 Feb 2016 | Admin Author

Finance Minister Nhlanhla Nene has announced firm measures to check South Africa's worsening debt outlook, warning that the country has reached an economic turning point.

In tabling his R4.4 trillion Medium Term Budget Policy Statement in parliament on Wednesday, he said the plan includes capping government spending and raising tax revenues.

Minister Nene said suggestions that he was tabling austerity measures was "an exaggeration" adding that while spending ceilings were being lowered, the country's budget would continue to grow in real terms.

He said parliament must consider his budget proposals at a difficult time.

"In many countries growth has slowed and the economic outlook is uncertain. Across the world, tough questions are being asked about how to generate growth and how to reduce inequality.Governments everywhere face difficult choices because the gap between what is required and what can be afforded is very wide. We have to be steadfast in our resolve to do more, together with less."

Meanwhile, the Finance Minister said when the 2014 budget was tabled in February government expected the economy to grow by 2.7% this year.

However, he told Parliament that this forecast has been revised to 1.4%, adding that Treasury projects that GDP growth will reach 3% only in 2017.

Minister Nene said this downward revision is partly because of a weak global environment, including the slow-down in our trading partners, Europe, China and other emerging economies.

"It also reflects challenges to our own development ranging from energy constraints, labour market disruptions, skills shortages, administrative shortcomings and difficulties in our industrial transformation. We have achieved much in the last 20 years. We have expanded education and healthcare, we have broadened economic participation and extended income support to the most vulnerable, but we are not making enough progress in raising incomes or reducing poverty."

Minister Nene stated that the 2014 medium term budget would not be balanced on the backs of the poor.

"This means that intensive effort has to be focused on achieving the intended savings and maximising efficiency.This will include a focus on procurement costs, in November we will release a public procurement review which clearly will outline reforms to be implemented over the next 5 years." said Nene.

He added that cost containment measures will be enforced to identify expenditure that can be eliminated without effecting service delivery.

"A culture of doing more with less is required. For example treasury is working with municiplalities to link the dispersment of infrastructure grants more tightly to the efficient delivery of capital projects. We will continue to fight waste and corruption, supported by our audit institutions and stringent monitoring and reporting requirements and that will require the oversight of Parliament."