MTBPS – Comment: SA’s finances ‘in good hands’

By Janice Roberts

The Medium Term Budget Policy Statement that Finance Minister Nene delivered in Parliament on Wednesday, held promise that SA’s finances are “in good hands”.

This is according to the President of the South African chamber of Commerce and Industry (SACCI), Vusi Khumalo.

SACCI welcomed:

  • The recognition that the energy constraints being experienced and the structural weaknesses add to the negative impact on economic growth that the global slowdown has on the country.
  • The acknowledgement that the country’s education and training capacity needs to be strengthened and levels of investment need to be increased.
  • A focus on the needs of small business specifically regarding taxation and the allocation of R24 billion for enterprise development.
  • The implementation of socio-economic impact assessments in identifying unintended consequences in legislation, regulation and policy. “This is something that SACCI has long called for,” Khumalo said.
  • The introduction of a legislative framework to regulate state-owned enterprises to address their governance issues. “SACCI trusts that this will reduce the need for the substantial bail outs that some have been receiving over a number of years,” Khumalo added.

There were, however, issues of concern for SACCI, “although government may not be able to exercise control over all of them.”

These included:

  • The reduced growth estimate of 1,5% for 2015 with a marginal improvement to 1,7% in 2016, compared to 2% and 2,4% respectively of the February budget together with a low 1,2% predicted investment growth due to limited employment growth and subsequent household consumer constraints.
  • The substantial increase in government debt from 26% following the recession to 47 of GDP this year. “However, it is pleasing to note that it is anticipated that it will stabilise at this level and is not expected to further escalate,” Khumalo said.
  • Apprehension that the reallocation of departmental expenditure to compensate for salary adjustments will lead to important projects not being financed.

“The MTBPS is generally conservative and is welcomed,” Khumalo concluded.

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