CAPE TOWN – The DA shadow minister of finance David Maynier, took a jab at Finance Minister Tito Mboweni’s, maiden Medium-term Budget Policy Statement (MTBPS) saying revealed a full-scale budget blowout, which was clear evidence that the “new path” of economic growth, employment and transformation had failed in South Africa.
Maynier said with stagnant economic growth of 2 percent, lower-than-expected revenue of R85 billion, higher-than-expected expenditure of R12bn and “bail-outs” of state-owned enterprises of R9bn, including a R5bn “bailout” of state-owned SAA.
When delivering the MTBPS Mboweni said his job was to make the fiscus stronger.
He said the government remained committed to its goal of stabilising and bringing down the debt-to-gross domestic product (GDP) ratio.
“In recent months, deteriorating economic performance, revenue shortfalls and a weaker rand have all contributed to higher debt projections. The consolidated budget deficit is estimated at 4 per cent in 2018/19, compared with the 2018 Budget projection of 3.6 per cent of GDP.
“After rising to 4.2 per cent, the deficit stabilises at 4 percent in the outer years. Gross debt is on pace to stabilise at 59.6 per cent of GDP in 2023/24,” said Mboweni.
Maynier said: “The fact is that, compared to Main Budget 2018, there will be significant ‘fiscal slippage’, with:
- the fiscal deficit increasing by R22bn in 2018/19, R33bn in 2019/20 and R41bn in 2020/21;
- national debt increasing by R19bn in 2018/19, R55bn in 2019/210 and R103bn in 2020/21; and
- the national debt will now only stabilise two years later at 56.5 percent of GDP in 2025/26.”
He said this meant debt service costs would skyrocket to R247bn in 2021/22, “which would be R148bn more than we will spend on police, R55bn more than we will spend on social grants, and is equal to what we will spend on basic education this year, 2018/19, in South Africa.
“Which is why ordinary people, who are battling to make ends meet, and who are battling to put bread on the table, are likely to be hit by further tax increases over the medium-term, to effectively “bail-out” the governing party, who have mismanaged the economy for more than a decade in South Africa.”
Minister Mboweni said the government had in recent budgets taken steps towards reducing the expenditure ceiling and increasing taxes. “Given the weakness of the economy, government is aiming to manage these pressures, while avoiding additional fiscal measures that could limit growth.
“Over the next three years, public infrastructure expenditure is estimated to be R855.2 billion, of which state-owned companies alone account for R370.2 billion. General government accounts for the remaining R485 billion, mainly in the form of conditional infrastructure grants.”
Maynier said the government had an expenditure problem and called for it to implement a Comprehensive Spending Review aimed at reducing national debt and debt service costs, over the medium term between 2019/20 and 2021/22.