Speech on the 2024 Fiscal Framework and Revenue Proposals and of Report of Standing Committee on Finance thereon
Speech by ACDP MP, Steve Swart

Issued by the ACDP Parliamentary Media Office

Proposals to use the R150 billion in the GFECRA account to offset the fiscal deficit are concerning

Mar 13, 2024

House Chair,

The public finances are in a dire situation. Gross debt has grown from R1.58 trillion 10 years ago to a staggering R5 trillion this year, and is said to peak at 75 per cent of GDP in 2025/26. And this is far higher than the 60 per cent of GDP recommended for emerging economies. 

This, I’m sure, is of great concern to every member of the House, as it is to the ACDP, and despite National Treasury’s commitment to fiscal consolidation, since 2012, both the budget deficit and debt-to-GDP ratios have consistently increased. 

Rising debt levels and debt service costs absorb more than 20c of every rand that is collected — that is R385 billion for this financial year — and crowds much needed expenditure on social development, health, community development economic development, and peace and security. This is a direct result of slow economic growth caused mainly by crises at Eskom and Transnet and, of course, poor economic policies by the ANC government. It is, in our view, time for change and time to vote in a new government.

Chairperson, the ACDP believes that slow economic growth and reduced tax collection has resulted in the need to reduce government expenditure. Revenue collection has deteriorated significantly. Windfall tax gain of the past few years have come to an end and National Treasury predicts a revenue shortfall of R56.1 billion in the present financial year.

Chairperson, the ACDP believes rather than increasing taxes, the tax base must be broadened whilst also improving tax compliance and administrative efficiency, and while no tax increases were announced, personal income tax will be increased by not adjusting the tax brackets, rebates and medical tax credits for inflation, and this will put further pressure on already constrained households and individuals.

The ACDP is also concerned about the proposals to use the R150 billion in the GFECRA (Gold and Foreign Exchange Contingency Reserve Account) account to offset the fiscal deficit. The Finance and Fiscal Commission emphasised that the use of this account is in effect weakening South Africa’s strategic position and capability to stabilise currency value in an increasingly volatile world economy.

The ACDP agrees, and by accessing these funds, President Ramaphosa is shielding the ANC from the consequences of poor economic policy policy, corruption and wasteful expenditure and it creates a dangerous precedent. What happens for future governments wanting to use this account and then depleting the country’s reserve buffer?

The ACDP cannot support accessing this account and will not support this report.

I thank you.  

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