Government is to take steps to strengthen budget controls over the medium term, Finance Minister Nhlanhla Nene said on Wednesday.
Tabling his maiden Budget, Speech in the National Assembly, Minister Nene said that new Treasury instructions will contain costs and additional controls on personnel budgets will be designed.
In addition, procurement reforms will be rolled out, including an online tender system that enhances public scrutiny, strengthens competition and levels the playing field for small business.
A price referencing system will provide state agencies with a benchmark for costing commonly procured goods.
According to Minister Nene, consolidated non-interest expenditure will rise from R1.123 trillion this year to R1.4 trillion in 201718 which is an average real increase of 2.1 % a year. The share of personnel compensation is projected to remain about 40 % of non-interest spending.
Interest on state debt will rise from R115 billion this year to R153 billion in 201718.
“Reductions in budget allocations have been targeted at non-critical activities. Cost containment and reprioritisation measures will limit growth in allocations for goods and services to 5 % a year,” he said.
Meanwhile, spending on catering, entertainment and venues is budgeted to decline by 8% a year while travel and subsistence will be cut back by 4% a year in real terms.
However, the Minister added that allocations for critical items like school books and medicine and maintenance of infrastructure will grow faster than inflation.
The budget framework includes an unallocated contingency reserve of R5 billion next year, R15 billion in 201617 and R45 billion in 201718.
This could allow for new spending priorities to be accommodated in future budgets. This takes into account that the economic outlook is uncertain and that both weaker growth and rising interest rates are possible over the period ahead.
“We are also mindful that public service salary negotiations have still to be concluded. We hope that agreement will be reached in time for salary improvements to be implemented in April,” he said.
In the next three years government’s gross debt stock is projected to increase by about R550 billion to R2.3 trillion in 201718.
Redemptions on debt issued over the past decade will add R190 billion to the medium term borrowing requirement. Net loan debt of the national government is expected to stabilise at less than 45 % of Gross Domestic Product (GDP) in three years’ time.
The Minister further added that the country’s liquid capital market and its standing in international markets enable the country to meet this borrowing requirement. “But we are mindful that debt sustainability requires a prudent budget framework and improvements in both saving and investment,” he said.
Source : SAnews.gov.za