The cut in government spending that the Minister of Finance, Nhlanhla Nene, announced during his medium term budget speech, is welcomed but is by far not enough to turn the sovereign debt situation of government around. The minister’s prediction that South Africa has now reached the economic turning point will therefore be proven wrong.
The freezing of certain public service budgets and the recalling of unfilled positions will bring about a saving of R1,3 billion. This is not enough to make up the shortages. That is why the minister is planning to collect R15 billion more with the following budget next year. The minister is clearly preparing South Africa for new and increased taxes and tariffs to make up the difference. This is a mistake in a time of very low economic growth and it will be a big damper on entrepreneurship and growth.
The FF Plus expected a stronger message levelled at public service trade unions and utility companies such as Eskom, SAA and the SA Post Office from the minister. The state’s debt risk will be high for as long as the government has to stand in for these companies and bail them out every time. The public service trade unions should also have received a clear message that there isn’t enough money available for the 15% increase that they are demanding.
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