Cape Town: MPs have welcomed the Minister of Finance Pravin Gordhan’s measures to clamp down on public debt, following his tabling of the Medium Term Budget Policy Statement in the National Assembly today.
ACDP MP Steve Swart said: “He sent a very strong message to investors and credit rating agencies, that we are following a prudent fiscal path and that we are busy with debt consolidation to reduce our government debt in the long term”.
Swart also said Gordhan sent a strong message on tackling corruption and wasteful expenditure urgently, as well as sticking to the February forecast.
He said The Economist cover article on South Africa last week was alarmist and added that he didn’t think the article took into President Jacob Zuma’s discussion earlier this month with social partners and the fact that South Africa was on course from a fiscal perspective of debt consolidation.
“Yes, there are aspects of our domestic economy that are of a concern, such as the illegal strikes which have impacted on our economy, but I believe in the long run we are going to see a very conservative fiscal policy with a slightly looser monetary policy which will stand us in good stead,” he said.
DA MP Tim Harris welcomed the spending freeze which he said would consolidate fiscal consolidation, which is something investors would be pleased to hear.
But he said the deficit, which is expected to rise to 4.8% this year – which he said was double that of other emerging markets – and that the country’s debt of 41% of gross domestic product (GDP) is significantly above other emerging markets where debt averaged about 35% of GDP.
He added that the government needed to put more emphasis on insuring that reforms and plans that it came up with – such as the Youth Wage Subsidy – were put into action.
But IFP member Mario Ambrosini said the middle-class would suffer the most with sluggish growth, through higher electricity costs and taxes and higher food prices.
He said South Africa would only get out of its present rut if it addressed ways to increase productivity and developed a sustainable economic growth that did not depend on subsidies.