Cape Town – Finance Minister Pravin Gordhan says government will stabilise debt at about 48% of the Gross Domestic Product (GDP), which is in line with its fiscal consolidation commitment.
The Minister said this when he tabled the 2017 Budget Speech in the National Assembly in Parliament on Wednesday.
“Today’s budget message is that we are once again at a crossroads,” he said.
The Minister said the key features of the budget framework for the 2017 Budget are that:
- Expenditure is within the envelope projected in last year’s budget;
- An additional R28 billion will be raised in taxes;
- The budget deficit for 2017/18 will be 3.1% of GDP, in line with government’s fiscal consolidation commitment; and
- Redistribution in support of education, health services and municipal functions in rural areas remains the central thrust of spending programmes.
According to National Treasury’s Budget Review, a measured approach that protects the public finances and creates an enabling environment for faster economic growth is required over the next three years.
National Treasury said the 2017 Budget proposals will:
• Reduce the expenditure ceiling by R10 billion in 2017/18 and R16 billion in 2018/19. This, National Treasury said, will be achieved through reduced national department operating budgets, lower transfers to entities, provinces and local government, and reallocations.
• Introduce tax policy measures to generate an additional R28 billion in revenue in 2017/18, mainly through higher personal income taxes and fuel levies. Proposals to raise R15 billion in 2018/19 will be announced in the 2018 Budget.
National Treasury said the combination of a lower expenditure ceiling and higher taxes will narrow the consolidated budget deficit from an estimated 3.4% of the GDP in 2016/17 to 2.6% by 2019/20.
“South Africa’s development objectives, expressed in the National Development Plan, rely on achieving higher economic growth and using public resources effectively. If low growth were to persist, however, government would have to adjust its spending plans, and determine which policies to implement, downsize or delay.” – SAnews.gov.za
