ANC REACTION TO THE MEDIUM TERM BUDGET POLICY STATEMENT(MTBPS)
The African National Congress (ANC)
We acknowledge that the growth performance of our economy has put significant pressure on our budget.
The ANC welcomes the reaffirmation of the priorities of the sixth administration in the budgeting framework. These priorities include the determination to:
Stabilise public finances while maintaining support for the most vulnerable and protecting front-line services;
Fast track growth-enhancing reforms. This includes a new financing mechanism for large infrastructure projects; and
Reconfiguring the structure and size of the state, while strengthening its capacity to deliver quality public services.
The economic performance of the country is far below the levels required to generate sufficient tax revenues to fund the various government programmes and the demands of our public expenditure. We also note that this MTBPS had to deal with a dual challenge of effectively responding to the immediate fiscal challenge while addressing the persistent crisis of low growth and high unemployment, poverty and inequality.
We note the fiscal envelope of 7.41 trillion over the next 3 years which must be used effectively as we confront the challenges of the evolving challenges of South Africans.
commends the Minister of Finance for walking the tightrope in
laying out the fiscal envelope for the next 3 years.
We also note the social wage support of R3.7 trillion over the next 3 years, including R927 billion for basic education; the commitment for health R767 billion and R196 billion for free higher education. These strong fiscal outlays demonstrate our support for balancing fiscal responsibility and the commitment to development priorities.
There is an urgent need to improve revenue efforts to create enough fiscal space for our national developmental goals. Every additional rand of revenue collected means one rand less which we have to borrow.
The erosion of the fiscal space occasioned by the current macroeconomic context will require comprehensive and sustained reforms to public finances to ensure public sector solvency, protect investment, safeguard achievements on the social front and broaden tax resources.
We also acknowledge that economic growth and development are indispensable as a foundation for domestic resource mobilization. Positive growth and development help to avert the fiscal crises that undermine broader economic and social stability.
As the ANC we will continue to adress the effectiveness of fiscal policy to drive economic growth and transformation. We continue to support better effectiveness of models of service delivery.
In this regard, we welcome the budgetary allocations aimed at protecting the poor and vulnerable. With the rising cost of living, we welcome the strategic decision to allocate funds to sectors that are personnel-heavy, such as Health, Education and Police Services. The allocation for funding of the wage increase and extension by another year of both the COVID-19 Social Relief of Distress grant and the presidential employment initiative will go a long towards the reduction of poverty, inequality and unemployment.
Our vision is to build an effective state that will promote economic growth, boost investment and accelerate employment creation. The government will not allow its programme to be crippled by rising national debt.
Our fiscal policy must continue to sustain and prioritize infrastructure spending and protect the livelihoods of the poor. More than ever before, we must make every effort to get the most out of productivity from the fiscal layouts. As per our 55th National Conference resolution that stated that “Government must use fiscal policy effectively to intensify its fight against poverty and inequality, prioritise infrastructure maintenance and investment…”, it is encouraging to note that excluding interest, funding for capital projects remains the fastest-growing item by economic classification.
The implementation of tax and expenditure measures to support the automotive sector during the transition from internal combustion engines to electric vehicles will boost our efforts to industrialisation effort. The implementation must be expedited including the effort of collaborating with other African
is ineffective if it is not accompanied by strong institutions. In particular, money must be spent
efficiently on programs to reduce poverty and improve development.
countries in pooling the critical-mineral resource base that Africa is endowed with to support battery manufacturing.
We commend active steps taken to boost economic growth, including through rail, ports and electricity sector reforms, as well as policies to mobilise public and private resources to expand investment and improve the maintenance and performance of existing infrastructure.
The implementation of the Generation Recovery Plan is beginning to bear fruits, with the return of two units at the Kusile power station that were out of service and in turn improving plant reliability thereby minimising the impact of load shedding. This will boost the economic performance and therefore fiscal collections.
An effectively functioning Transnet is vital to South Africa’s economy and necessary for the country to achieve sustainable growth. The entity has experienced numerous challenges over the years, from both internal and external factors, which are evident in its financial performance.
We welcome the work done by the NLCC to effect improvements. There are also initiatives already underway that are aimed at curbing theft and vandalism of infrastructure throughout the rail network but with a focus on key export corridors. Resolving load-shedding and logistics challenges will go a long way in boosting our economic growth and improving our public finances.
ISSUED BY THE AFRICAN NATIONAL CONGRESS
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