CAPE TOWN - A coordinated response to South Africa’s economic woes was tackled in Finance Minister Malusi Gigaba's maiden Budget Speech, where he detailed how the 14 point plan will be achieved.
According to Gigaba, the fiscal framework has improved markedly since the October medium term budget speech.
"That opportunity comes from a stronger rand and favourable inflation outlook. That opportunity comes from the strong partnership which has been forged between all the social partners to prevent further ratings downgrades, and remove obstacles to investment, growth and job creation. That opportunity comes from improving confidence, as business and consumers have responded positively to political developments over the last three months, and are anticipating progressive, ethical and decisive leadership from government", said Gigaba.
He noted that at the time of the MTBPS, government debt was on an unsustainable path.
This was further weighed down with the announcement of free higher education, announced under the former leadership this year.
On an optimistic note, he said that new tax measures will raise an additional R36 billion in 2018/19 " mainly through a higher VAT rate and below-inflation adjustments to personal income tax brackets".
He also noted revisions over the next three years to government's spending framework.
- Expenditure reductions approved by Cabinet amounting to R85 billion.
- An allocation of R57 billion for fee-free higher education and training.
- Additions to the contingency reserve amounting to R10 billion.
Gigaba said that public procurement is worth hundreds of billions of rands annually and it is critical to change the production and ownership patterns to empower black people, women and the youth.
Following amendments to the Preferential Procurement Regulations became effective in April 2017, Gigaba said that the Public Procurement Bill will be submitted to Cabinet in March 2018 for gazetting for public comments.
State Owned Companies
Gigaba reassured that government will ensure that state owned companies are run sustainably and contributes to national development.
"Government recognizes that the business models of some SOCs are unsustainable, and their capital structures too reliant on debt. To confront these issues, we will assist them to develop and implement robust turnaround plans.This needs to be part of a holistic reform programme which considers the role we want SOCs to play in our economic development. Some will require restructuring with equity investment", said Gigaba.
Meanwhile, Gigaba in July last year stated his vision for the inclusive 14 point plan to grow the economy.
Gigaba told journalists in Johannesburg that althrough the action plan the government was demonstrating that it was taking steps to grow the economy.
"I am confident that we can achieve higher growth as a platform to achieving a 3 % growth that can go up 6 %,” he said, adding that the plan would help address the triple challenges of poverty, unemployment and inequality".