House Chair,
The ACDP has taken note of the Committee’s Report on this budget vote. National Treasury plays a crucial role in ensuring the financial and economic stability of the country. Following a decade of low economic growth, the country faces very difficult fiscal choices. We have high inflation and high interest rates that have made the cost of living almost unbearable, and this has driven up government’s borrowing costs.
It is crucial then for government to adopt policies that will support higher public and private investment while stabilising debt and reducing overall fiscal risks.And, whilst there’s been a welcome reprieve from load-shedding, the previous persistence and severity of load-shedding, together with the poor state of our ports and freight rail, have taken its toll on economic growth prospects for the country.
As the ACDP, we believe that with more targeted interventions honourable Minister, better policies and speedy implementation, economic growth can improve significantly. This, we believe, will address fiscal vulnerability, stabilise public finances and create more jobs.
National Treasury and the honourable Minister are at the centre of formulating fiscal policy. This needs to prioritise stabilising debt and debt service costs, which is set to peak at 75.3% of GDP in 2025/26. This is staggering and it’s far higher than the 60% of GDP recommended for emerging economies. Debt service costs, as we know, absorb more than 20 cents of every Rand of collected revenue and crowd out much needed expenditure on social development, health, community development, economic development, peace and security, and much need infrastructure development.
National Treasury and SARS themselves are faced with budget reductions which can impact on them fulfilling their mandates.
The ACDP supports the Committee’s Report and recommendation to closely monitor the impact of these budget reductions, especially in the critical areas of asset and liability management and revenue administration. And, honourable Minister, we in the ACDP will look closely at the concept of a fiscal anchor and consider that legislation which has been proposed.
Whilst we understand the need for fiscal consolidation to reign in public debt, we believe that a careful balance must be struck between fiscal consolidation and maintaining essential public services.
Now, I speak on many budget debates and hear many departments complaining about the budget reductions. I’ve just come from debating the Justice budget vote, where the SIU and NPA have seen budget reductions. Both of these entities can collect billions of Rands through the Asset Forfeiture Unit and through other mechanisms. I would urge you to reconsider reducing their budgets because they can recover billions of rands of stolen state funds.
I thank you.
