CAPE TOWN - The African Christian Democratic Party (ACDP) has expressed its concerns about the South Africa's "fiscal slippage and spiralling government debt levels" that was announced by new Finance Minister, Tito Mboweni, during his maiden Medium-Term Budget Policy Statement in Parliament on Wednesday.
"Minister Mboweni had very little fiscal room to move given the technical recession we have experienced. He has committed to adhere to fiscal sustainability in order to reign in the spiralling public debt levels, and instil confidence in investors and ratings agencies," ACDP member of Parliament (MP) and spokesperson on financial matters, Steve Swart said.
"While the expenditure ceiling, the anchor of fiscal policy, remains intact, we are concerned at the fiscal slippage since February’s budget."
The budget deficit is estimated to be four percent of the GDP for the present fiscal year which is up from February's estimate of 3.6 percent and staying at this level over the medium term.
"Even at this rate, and with a low economic growth of below one percent, the fastest growing item on the budget is debt service costs (R181bn), which are set to balloon over the medium term. There is little or no room to increase taxes, with the result that government expenditure must be reduced to contain the budget deficit," said Swart.
However, the ACDP said it welcomed the further details provided about the R50 billion economic stimulus package that was announced by President Cyril Ramaphosa last month.
"We agree that a shift needs to take place from consumption spending (salaries, etc) to infrastructure spending. This also requires a reprioritisation of government expenditure within the fiscal framework. Minister Mboweni was also very clear that the ballooning public sector wage bill is unsustainable and that steps need to be taken to reduce this expenditure. The additional R30 billion needed for the increased public sector wage bill over the medium term poses a serious risk to the expenditure ceiling and fiscal consolidation path," Swart said.
The political party said as far as further bail-outs to State-Owned Companies (SOCs) are concerned, they would not support it.
"The R5bn to [SA Airways] SAA, the R2.9bn to the SA Post Office, and the R1.2bn to SA Express Airways, the ACDP does not support and while we appreciate that the recapitalisation to SAA is to settle debt and prevent a call on the airline’s outstanding debt of R16.4bn, which is guaranteed by Government, the question is how much more is to be spent on bankrupt SOC’s," Swart.
Although bail-outs are not supported by the party, it does support measures to stabilise SOCs and in particular, Eskom which according to the ACDP presents the biggest threat to state finances.
"Strict discipline and a firm hand on the public finances are required. We will be closely engaging Minister Mboweni’s medium-term budget policy statement in the run-up to February’s budget speech."
- African News Agency (ANA)