DURBAN - The African Christian Democratic Party (ACDP) said on Wednesday that Finance Minister Tito Mboweni's 2019 budget reflected a deviation from the 'strict fiscal consolidation' adopted by his predecessors.
Mboweni delivered the budget speech in parliament earlier on Wednesday.
ACDP MP and spokesperson on finance, Steve Swart, said Mboweni deviated from the path required to reign in spiralling public debt levels and instill confidence in investors and ratings' agencies.
“The new Finance Minister, Tito Mboweni, had very little fiscal room to move given the low economic growth we have experienced. Consequently, he has not been able to adhere to the strict fiscal consolidation path announced by his predecessors in order to rein in the spiralling public debt levels," said Swart.
"The budget deficit for this financial year is set to be 4.2% of GDP (slightly up from last February’s forecast of 3.6% of GDP), while the forecast for the 2019/20 financial year is 4.5% (significantly higher than the 3.6% forecast in February last year). With low economic growth of 1.5% of GDP, the fastest growing item on the budget is debt service costs, which are set to balloon over the medium term (R202bn for 2019/20)," said Swart via a statement.
He said the ACDP welcomed the fact that there was no increase in personal and corporate tax rates or the VAT rate.
"We also welcome the increases in social grants, but believe they should have been higher, given the pressure on households," he said.
He said the ACDP was expecting additional funding for the National Prosecuting Authority (NPA) to fund its new investigating directorate.
The directorate would play a crucial role in bringing those implicated in state capture and corruption to book and in recovering the stolen state funds, said Swart.
"A credible plan must be provided to boost economic growth to address unemployment and poverty, as well as contributing much-needed revenue to the state coffers. A shift needs to take place from consumption spending (salaries etc) to infrastructure spending. This will require a reprioritisation of government expenditure within the fiscal framework."
The party was awaiting the response of investors and credit ratings' agencies to the speech, said Swart.
"The ACDP also notes that government is not going to take over Eskom’s debt, but that R23bn per year for three years will go to support Eskom during the reconfiguration. The bailout was necessary in the short-term, given that Eskom’s R419bn debt presents the most significant threat to state finances. We believe however, that the ANC-led government must be held accountable for the poor financial and operational state of Eskom," he said.African News Agency