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This budget policy statement emphasizes the need to re-balance the South African economy and address unemployment, poverty, and corruption. It highlights the importance of accountability, reprioritization, and a performance culture. The statement also discusses the challenges posed by global developments and the need for faster job-creating growth. Partnerships between government, business, and labor are crucial for promoting job creation, investment, trade, and competitiveness.
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FEDUSA 2010 Medium Term Budget Policy Statement Comments The Joint Portfolio Committee on Finance 11 November 2010
MTBPS Discussion Items • To re-balance the economy after the deep recession, global developments and the need to make some inroads in our mass unemployment and poverty • To this list must also be added the urgent need to step up service delivery and to eradicate corruption and fraud. • South Africa scored first out of 94 countries in the International Budget Partnership’s survey of budget transparency.
Improved accountability by organs of state • A reprioritizing so that money moves from low-priority programmes to high-priority programmes. • A performance culture where people are held accountable for their actions, accompanied by clear, measurable outcomes related to key development priorities. • Management by growth in its consumption expenditure and obtain better value for money.
Economic policy outlook • The crucial issue to be addressed during this MTEF period is how to increase job-creating growth. • Capital inflows and the appreciation of the Rand following recent global developments pose serious policy challenges. • This implies that export prices are low while imports are cheaper • Faster growth is required over an extended period of time to significantly increase labour absorption, reduce high unemployment and achieve a more equitable distribution of income.
New Growth Path We are not out of the woods yet – Eurozones sovereign debt crisis and troubled banking system – Prof Desmond Lachman Greek – extraordinarily bad public finance (Budget Deficit 14% of GDP) and loss of international competitiveness (20% of wages and Prices) Spain – Balance of payments problems (external debt problems) Portugal – ECB Loan Book 37% Greek, Spain, Portugal & Ireland Ireland – Likely to default on its sovereign debt (deficit of 12% of GDP) South Africa is vulnerable to any renewed global downturn
Negotiated New Growth Path Partnerships between government, business and labour are needed to create jobs, especially for youth South Africa needs to promote largescale job creation, increased investment, greater trade, higher savings and a more competitive economy. This requires addressing constraints to growth, including infrastructure bottlenecks, skills deficiencies, state inefficiency and regulatory burdens that act as a disincentive to small business activity.
Partnership between Government, Organised Labour and Business • Rapidly reduce youth unemployment • Contain price and wage increases to support competitiveness and higher exports • Make more effective use of development finance institutions to fund domestic and regional infrastructure development • Promote sustainable use of energy and natural resources • Support land reform and bolster agricultural productivity to increase food production and rural development • Remove constraints to mining and industrial investment, including capacity limitations in energy, transport and telecommunications.
