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This MTBPS was delivered, maybe in the toughest circumstances since 1994, therefore we welcome the commitment to work towards the reigniting of growth, the starting of implementing the NDP, the strengthening of infrastructure planning and the reinforcing of the fiscal stance.
We welcome the more realistic growth forecasts, for the next three years. The maintaining of the expenditure ceiling is good news allowing the budget deficit to narrow from 4.2% to 3% in 2016/17. To keep non interest public spending annual increase at 2.2% is good news.
The fact that the Government will meet its budget deficit target for 2013/14 will assist to avoid a second downgrade by Credit Rating Agencies (CRA). The high current account deficit of 6.5% of GDP, the volatility in investor sentiment remains a major concern. The fact that we remain in the inflation target of below 6% will please the CRA’s. The fact that growth in personnel spending is curtailed will limit the State Wage Bill.
For the third year in a row the date when national debt is projected to stabilize at 44% of GDP is pushed out to 2017/18. This is a bad trend and should not be allowed. We are running high debt levels in comparison to other Emerging Markets – it remains concern that stabilization is not reached earlier. Debt also not only stabilized later, but at a higher level relative to GDP.
Debt service costs will be over a R100 billion rand in 2013/14 stabilising and a whopping R135 billion in 2016/ 17.
There is clearly no room left to fund other priorities, the Finance Minister has missed an opportunity to divert funds from non-performing and non-essential programmes, starting in 2013/14. The steps to eliminate wasteful expenditure, is not enough, and too late, however it will send a very strong signal not to waste.
We were a few minutes away from alarm bells to go off, this MTBPS contains a fair amount of Gordhan’s magic lipstick– hopefully, this will avoid a downgrade. We do not see any plans to restore fiscal room in the next three years – and the pressure to introduce new taxes will remain.
The fact that Agriculture output grew by 3.6% in the first half of 2013 is good news – if Government takes this industry more
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