Treasury plan to use SA reserves slated

Matthew Parks, acting national spokesperson for Cosatu, said the union welcomes the engagements

Matthew Parks, acting national spokesperson for Cosatu, said the union welcomes the engagements

Published Dec 19, 2023


Political parties have expressed opposition to national Treasury’s consideration of withdrawing half its contingency reserves to reduce government's debt and fund public sector salaries.

However, trade union Cosatu welcomed the move to ease the debt on state-owned enterprises.

Dr Dion George, DA spokesperson on finance, said the government wants to access a portion of the funds held by the Reserve Bank.

“The reason is that the government has run out of money and wants to pay debt and fund public sector salaries.

“Our economy is not growing, therefore there is not enough revenue to pay for the excessive spending by the government.”

Government spending on the public sector wage bill continues unabated, George said.

“The government said they would restrain that spending, but it has not happened. That number keeps going up and needs to be funded.

“We also have to bear in mind that there is a never-ending amount of bailout to state-owned enterprises, which the government said they would stop, but hasn’t.”

George said that if the government plans to access this reserve to fund consumption expenditure, the raid on the bank will not make any difference.

“The actual solution is for the government to cut down on expenditure and look at ways to stimulate economic growth.

“If the funds are withdrawn they won’t have reserve funds when they are actually needed.”

IFP national spokesperson Mkhuleko Hlengwa said it was a reckless move by the Treasury to withdraw reserves from the South African Reserve Bank.

“It is a quick fix, that is not sustainable in the long term. This is largely due to the government not being able to balance the books as the public sector wage bill continues to grow and debt servicing costs are forecast to grow to almost 80% of GDP by 2025/26.”

Herman Mashaba, ActionSA president, said that the party was opposed to withdrawing from contingency reserves to reduce the state’s debt and fund public-sector wage salaries.

“South Africa finds itself in this difficult position where our debt is increasing exponentially as a result of the governing party’s mismanagement of the economy, and irresponsible management of the fiscus.

“Our public sector wage bill remains bloated with exorbitant salaries for senior personnel while billions of taxpayers’ money is lost through corruption and fruitless expenditure.”

ActionSA believes that a change of policy is needed to get the government out of the debt it is facing, Mashaba said.

“The only way to get South Africa out of this difficult position is if we professionalise our public sector, reform our laws, increase private participation and kick-start the economy to create jobs and increase state income.”

Matthew Parks, acting national spokesperson for Cosatu, said the union welcomes the engagements.

“It’s not something that can be done often or taken lightly, but it’s an option that can be done in extraordinary times.

“It would make sense to use the space it provides to reduce Transnet’s debt burden to allow it to use its resources to focus on getting Transnet freight rail and ports working.”

Parks said that this could be key to securing thousands of jobs in the mining, manufacturing and agricultural sectors.

The Mercury