SA needs more bang for fewer bucks – Nhlanhla Nene

2014-10-22 14:23

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Doing more, together, with less. That is how new Finance Minister Nhlanhla Nene described the challenge he faced when drawing up his maiden Medium Term Budget Policy Statement.

South Africa’s sluggish growth rate was partly because of global influences, he said.

“But it also reflects obstacles to our own development: energy constraints, labour market disruptions, skills shortages, administrative shortcoming and difficulties in our industrial transformation.”

All of these factors had impacted on the country’s primary goals of raising income and reducing poverty.

South Africa had achieved successes in 20 years, he said.

“... but we are not making enough progress … Far too many people are unemployed, which deepens inequality and heightens vulnerability. We import considerably more than we export.”

“As a result of slow growth, tax revenue is below our budget projection. Government’s debt continues to rise as a percentage of GDP.”

Nene’s mini-budget aimed to restore balance to the nation’s finances, bolster investment and achieve better value for money in public expenditure. All of this was within the framework of the National Development Plan, which is about growth and redistribution.

His mini-budget provided a “roadmap” to safeguard the public finances. A key element included a fiscal package that reduces the expenditure ceiling and raises tax revenue over the next two years. This will reduce the budget deficit and stabilise debt, which is now set to reach R2.4 trillion in 2017/18.

“These changes are fundamental to our economic transformation because they are the foundations on which our social progress and human development goals will be achieved.”

Nene warned that South Africa could not achieve its goals if it continued on its current path.

“We have to navigate a definite change of course, taking all South Africans with us.”

“Governments everywhere face difficult choices because the gap between what is required and what can be afforded is very wide. And so we have to be steadfast in our resolve to do more, together, with less.”

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