Finance Minister Enoch Godongwana tables the medium-term budget policy statement in Parliament, Cape Town, on Wednesday.
Opposition parties have offered mixed reactions to Finance Minister Enoch Godongwana‘s medium-term budget policy statement (MTBPS) presented in the National Assembly in Cape Town on Wednesday.
Parties criticised Godongwana’s budget announcements, accusing government of failing to provide clear solutions to the country’s fiscal challenges.
In his speech, Godongwana attributed the R57 billion plunge in government’s tax revenue forecast to lower commodity prices, load shedding, Transnet’s operational challenges and weak economic growth.
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DA MP and finance spokesperson Dion George said the MTBPS was further evidence that government lacked a clear and effective plan to address the country’s most pressing economic challenges, including boosting growth, ending load shedding, stabilising debt, controlling spending, assisting vulnerable South Africans and fighting corruption.
George said the DA’s only consolation was government’s plan to accelerate public-private partnerships to rebuild South Africa’s crumbling infrastructure.
He said:
Although government claims to be making significant progress on resolving relentless blackouts, the lights remain off, and government’s commitment to unbundling Eskom is not moving fast enough, while the entity continues to generate enormous losses.
“Tepid economic growth is projected to continue with the result that revenue projections remain overstated, and government was, therefore, forced to cut expenditure on service delivery and social spending in the absence of any bold initiatives. This means that department budgets will need to be cut further if government wants to avoid running out of money,” George added.
READ: MTBPS: R56.8 billion budget shortfall expected as government finances go from bad to worse
EFF chief whip and MP Floyd Shivambu said the party rejected the MTBPS “with the contempt it deserves”, slamming it as a continuation of Treasury’s austerity measures to cut government spending at the expense of the poor and vulnerable.
He said:
If you look into the Division of Revenue Amendment Bill, which has been introduced by the minister of finance, it’s reducing the allocation of R6.2 billion to all the provincial grants, which are the grants that were supposed to deal with healthcare infrastructure, education, as well as land use and agricultural grants that would normally be allocated.
Shivambu said the ANC-led government’s inability to expand the revenue base was due to its failed economic policies, which, he said, have stifled economic growth and job creation.
“The economy is shrinking, the revenue base is shrinking as well [and] there is no basis from which they can expend the money that is needed to respond to our challenges,” he said.
ANC secretary-general Fikile Mbalula commended Godongwana, saying the MTBPS aligned with the party’s call for Treasury to prioritise cushioning the poor from harsh economic policies aimed at reducing the budget deficit, rather than focusing on austerity measures.
Mbalula said:
The minister ensured that we remained focused in terms of our infrastructure projects while at the same time ensuring that education and health were equally protected in terms of the budget and social security protection.
“With all the challenges that we are facing, we think that he struck the right balance in terms of the challenges that we are facing,” he added.
READ: Godongwana praised for resisting pressure amid R57bn revenue shortfall
IFP MP Inkosi Mzamo Buthelezi said Godongwana’s address to Parliament did not inspire confidence among South Africans over the future of the country’s finances.
Buthelezi said:
We really are not happy as the IFP. Our debt remains very high, and the costs to service that debt remain high. The public wage bill remains very high, and our revenue collection is very poor.
African Christian Democratic Party (ACDP) MP Steven Swart expressed concern over government’s debt-service costs, which were projected to rise from R4.8 trillion in 2023/24 to R5.2 trillion in the next financial year, calling the trend “simply unsustainable over the long run”.
He said:
As the minister has already indicated, we are facing a financial and fiscal crisis. The only solution is to stimulate economic growth so that one can create jobs and collect higher revenue.
Swart added that the ACDP was eager to see how government planned to balance the budget in February next year, given the challenging economic climate.
Despite Godongwana’s assurances that Treasury was on top of the situation when it came to the country’s finances, UDM MP Nqabayomzi Kwankwa remained unconvinced, warning that the country was on the brink of bankruptcy and that a fiscal crisis was imminent.
He said:
That’s what is going to happen if we continue on this path. No fiscal consolidation over the years has been done. No proper management of the country’s finances has been done.
Kwankwa added that government’s promises to address corruption, which was undermining the fiscal position, had remained unfulfilled.
“The country is broke. Imagine if we are going to borrow R553 billion per annum in order for us to survive and meet our expenditure needs, how are you going to pay for other services? There are other pressing and competing needs of the country. This is simply because the ANC government has not been able to manage the country’s finances.”
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