Radebe: state needs to tighten belt
• Reprioritisation needed to meet development aims
The overall medium-term budget allocations cannot be increased in 2018 due to slow economic growth and lower government revenue, says Minister in the Presidency and chairman of the National Planning Commission Jeff Radebe
The overall medium-term budget allocations cannot be increased in 2018 due to slow economic growth and lower government revenues, says Minister in the Presidency and chairman of the National Planning Commission Jeff Radebe.
The government would look at reducing expenditure by placing strict limits on contingency liabilities and litigation costs by developing a mechanism with the Department of Justice to determine cases to be defended or for arbitration, Radebe said.
Ratings agencies have warned that rising government guaranteed debt and contingent liabilities pose a serious risk to SA’s sovereign credit rating.
In a report on the effect of rising poverty and unemployment on SA’s fiscal consolidation process published on Thursday, Moody’s said pressure to increase public spending in response to rising poverty will further complicate fiscal consolidation. In August, Statistics SA revealed that, as of 2015, one in four South Africans (25.2% of the population) lives in extreme poverty, an increase from about one in five (21.4% of the population) in 2011.
Speaking during a media conference on Thursday to mark the fifth anniversary of the adoption of the National Development Plan (NDP), Radebe said given the absence of fiscal space, departments would have to use noncore spending and nonperforming programmes to finance their identified priorities and fund national priorities.
“This means that it is important to focus on areas where government expenditure can be reduced,” said Radebe.
“Urgent priorities for the 2018 budget, deriving from cost pressures and the need for catalytic spending, will have to be funded from reprioritisation. In reprioritising, the interests of youth, women, children, small business, the informal sector and the environment must be factored in.
“Consideration must also be given to high-risk areas such as higher education, public transport and land reform,” he said.
Other measures the government would implement to reduce expenditure, in line with the mandate paper, included limiting the use of consultants, optimising state procurement by setting pricing parameters and centralising procurement of major items, as well as improving contract management and procurement compliance.
The government would also insist on good governance and penalise lapses in governance by withholding transfers and/or guarantees, said Radebe.
The Department of Planning, Monitoring and Evaluation was instructed to develop the mandate paper on an annual basis to guide the upcoming budget process to ensure a focused implementation of the government’s plans, he said. The mandate paper identified higher education, social security and job creation as priorities.
“The need for corrective and structural intervention such as the mandate paper is to enhance the precision and targeting of budget allocation to NDP objectives through the identification annually of a set of priorities, reflective of objective assessment and conditions at the time,” Radebe said.