Cape Town - Finance Minister Nhlanhla Nene has called on South Africans to work together to steer the country through the current tough financial environment.
“We are in a challenging environment… This is a global phenomenon but most of the challenges are domestic and it is those challenges that I think we should focus on because those are the ones we have control over and those we can actually make interventions that would make a change,” he told an SABC-The New Age (TNA) business briefing on Thursday.
The Minister’s comments come after his maiden presentation of the Medium Term Budget Policy Statement (MTBPS) in Parliament on Wednesday.
“Tough times require some tough decisions which might be unpalatable, but I think if we all understand the environment in which we are, it is the pain we should be prepared to take for a short while and then be able to create the fiscal space to be able to confront the challenges that we have. So we are in difficult times but we have a plan,” he said.
In his address on Wednesday, the Minister emphasised the need to restore fiscal credibility and sustainability by improving spending efficiencies, cutting out wasteful spending and boosting tax revenue.
Savings
On a question of saving patterns in the country, Minister Nene made the analogy of farmers keeping aside some seed after planting and harvesting to ensure that their needs are met in future.
“As a country if we do not save, it means we have to depend on other people’s savings to execute our own programmes. Other people will send their savings your way and you will pay them and there’s a price for using other people’s savings.
“We’ve been living on borrowed money but … there is nothing wrong with borrowing if you are borrowing to invest but if you are borrowing to consume, then you have a problem,” he said.
In the MTBPS, which is also known as the mini-budget, government said that it has proposed a new framework for funding state-owned companies, which will include closer monitoring of such entities.
State-owned companies and public entities play an important role in realising government’s economic and social mandate.
“Government is proposing a new framework for funding state-owned companies that will distinguish purely commercial activities from the costs of exercising their developmental mandate,” said National Treasury in the MTBPS.
According to the MTBPS, given the fiscal constraints over the next two years, capitalisation will only be funded by the sale of non-strategic state assets and will not be drawn from tax revenue or added to the debt of national government.
Steps to safeguard Eskom
While tabling the MTBPS, Minister Nene said that steps to safeguard power parastatal Eskom have been taken to secure its financial stability. Eskom will borrow R250 billion over the next five years supported by existing guarantees from government. Government will provide at least R20 billion in funding raised through the sale of non-strategic assets.
Clarifying the matter on Thursday morning, Minister Nene said that government was dealing with the immediate financial situation at Eskom. This as the power utility has previously said that it has a R225-billion funding shortfall over a five-year period.
“What we are doing for Eskom is actually dealing with the immediate financial situation or the financial health of Eskom in order for it to be able to stand on its feet to go out into the market and borrow.
“… For some time as a country, we have admitted that we’ve had cheap electricity. I’m the first to admit that this is not the right time to be burdening the citizenry with more money but we need to be realistic and say that Eskom needs to move to a cost reflective tariff,” said Minister Nene.
He said government’s task is to protect the poor and issues such as the governance of Eskom need to be looked at.
The Minister also highlighted the importance of ensuring that the private sector flourishes in order to grow the economy.
He said government is working hard on creating an enabling and conducive environment to ensure that the private sector flourishes.
“That’s where the economy lies,” he told those attending the gathering.
He also called for an active citizenry, saying that the public should be itching to go into business so as to grow the country’s economy.
“We need to work together,” he said. – SAnews.gov.za
