Government remains committed to reducing budget deficit

Wednesday, May 24, 2017

Cape Town – Finance Minister Malusi Gigaba says government remains committed to reducing the budget deficit.

The Minister on Tuesday tabled the National Treasury Budget Vote in the National Assembly. This was his maiden Budget Vote since his appointment to the portfolio.

He said for South Africa to retain its sovereignty in order to make decisions in its national interest, government must avoid the trap of incurring levels of public debt that are unaffordable to repay. 

“Spending plans over the medium term allow for moderate real expenditure growth, with priority given to advancing higher education, health and social development. The government wage bill will stabilise as a share of the budget, largely as a result of measures to reduce appointments in non-critical posts. 

“I am pleased to announce that the budget deficit for 2016/17 is marginally lower than the estimate presented to the House in February, which was 3.9% of GDP [gross domestic product], and is now estimated at 3.8% of GDP. 

“Over the next three years, the deficit will be reduced to 3.3%, stabilising debt as a percentage of GDP and confirming the resilience of our public finances,” Minister Gigaba said. 

The Minister said in the period ahead, government will focus on strengthening budget execution and the in-year monitoring of spending. 

National Treasury is working with the Department of Public Service and Administration and all departments to strengthen the monitoring of personnel trends, and to help managers operate within budget constraints. 

“We are working with other government stakeholders on a new infrastructure financing facility that will address shortcomings in the planning and execution of infrastructure projects and will ensure thorough technical analysis takes place,” Minister Gigaba said.

Minister announces municipality game changers

The Minister said, meanwhile, that in order to improve the efficiency and capacity of all municipalities, the National and Provincial Treasuries have agreed to focus on four game changers in their efforts to improve the capacity and financial performance of municipalities. These include:

  • A new Municipal Standard Chart of Accounts will be implemented across all 257 municipalities from 1 July 2017. This is a major reform that will create line of sight from a municipality’s Intergraded Development Plan, through their budget, financial reporting and annual performance plan against pre-determined service delivery targets; 
  • An improved supply chain management to reduce irregular expenditure and generate significant savings, led by the Office of the Chief Procurement Officer; 
  • An improved revenue management framework for municipalities that seeks to improve the internal controls, cash flow management and operational efficiencies in municipalities and reduce unnecessary and wasteful expenditure; and 
  • Treasury has identified that improved asset management is essential for continuous delivery of services and to generate the associated revenue. The budget guideline is that municipal capital budgets have a 60% allocation for new assets and 40% for the renewal and upgrading of existing infrastructure. In addition, municipalities are encouraged to spend at least 8% of the value of their assets on routine maintenance. 

“We also need to make every effort to address the culture of non-payment [to service providers] by engaging all stakeholders,” he said.

SAA, SA Express merger still on the cards

Addressing journalists at a media briefing shortly after the Budget Vote Speech, the Minister said the proposed merger between South African Airways (SAA) and SA Express was still on the cards.

He said the review on the viability of the merger was done, pending his own assessment and decision on the way forward, in consultation with the SAA Board. –

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