Chairperson, the ACDP notes from the report that the fiscal strategy largely meets the fiscal targets set out in May. It aims to maintain a primary surplus, narrow the budget deficit, and stabilise gross loan debt at 77.9% of GDP for this year which is still, in our view, very high.
Despite the many challenges, however, it seems that the ship of state is slowly turning in the right direction. This must, however, translate into more jobs and poverty alleviation to ensure social stability and bring hope to South Africans.
In this regard, the ACDP welcomes the extension of the SRD grant to March 2027 to assist the poorest of the poor. It is, however, regrettable that the grant remains at R370 per month, significantly below the food poverty line of around R760.
Lower than forecast economic growth and high public debt—although stabilising—and debt service costs in the short term, remain concerning. Public debt is still growing much faster than the economy with debt service costs crowding out much needed expenditure on budgetary items such as health, education, and fighting crime and corruption.
We commend SARS for higher than expected revenue collection—an additional R19.7bn—and we believe that SARS is really doing a good job with the additional resources that were given to it.
The ACDP is concerned that private sector fixed capital investment has, over the years, slowed significantly due to weaker business confidence. This has resulted in companies accumulating cash reserves of more than R1.8 trillion, rather than investing in the country. This obviously impacts on economic growth. We trust that political stability will result in increased private sector capital investment.
Chair, the ACDP joins the Reserve Bank Governor in questioning credit ratings agencies which often emphasise downside scenarios when it comes to South Africa. They tend to focus on what could go wrong rather than what could go right. And, as we see ‘green shoots’ at the moment, it seems that these agencies consistently err on the side of pessimism. I would ask that this aspect—that is the issue of credit ratings agencies—is dealt with by you, honourable Minister, in your response.
The ACDP agrees with the G20 Africa Expert Panel that the solution of what appears to be structural bias against certain African countries, including South Africa, would be disclosure of ratings data methodology, given the severe impact that such agencies have on the fiscal outlook of countries.
The ACDP will support the report, given the green shoots that we do see in the economy.
I thank you.
