CAPE TOWN – Finance Minister Tito Mboweni on Wednesday proposed consolidated spending of R6.2 trillion over the 2021 Medium-term Expenditure Framework, of which R1.2 trillion goes to learning and culture, R978 billion to social development and R724 billion to health.
Mboweni made this proposal when delivering his Medium-term Budget Policy Statement where he forecast the South African economy to grow by 3.3 percent in 2021, percent in 2022 and 1.5 per cent in 2023.
Mboweni said: “The June 2020 Special Adjustments Budget was prepared in an environment of extreme uncertainty. Given the economic situation then, the government proposed a three-year fiscal consolidation.
“Since June, more data has become available. The economy is now expected to contract by 7.8 percent this year, and the 2021 outlook is more uncertain. Job losses have been particularly severe.”
The minister, however, said the National Treasury could not allow the recent fiscal weakness and the pandemic to turn into a sovereign debt crisis.
“Therefore, today the government sets out active measures to avoid this risk. We table a five-year fiscal consolidation pathway that promotes economic growth while bringing debt under control.
“The fiscal measures realign the composition of our spending from consumption towards investment and support efforts to lower the cost of capital,” said Mboweni.
He said the revised fiscal framework puts the country on a course to stabilise the ratio of debt-to-GDP at around 95 percent within the next five years. The stock of gross debt would rise from roughly R4 trillion this year to R5.5 trillion in 2023/24.
The minister said the medium-term fiscal strategy narrowed the main budget primary deficit from an expected R266 billion in 2021/22 to R84 billion in 2023/24 and a surplus could be achieved by 2025/26.
“Mr President, by putting all our efforts into implementing the Economic Reconstruction and Recovery Plan, we can accelerate growth to 3 percent or more.
’’This will secure fiscal sustainability and build this economy better than before,” said Mboweni.