Government departments’ failure to spend budget allocations has come under fire in Parliament. The Chairperson of the Standing Committee on Appropriations Mmusi Maimane bemoans the return of money to the National Treasury, due to underspending, labelling it a criminal act. Maimane was opening the debate on the Appropriations Bill commonly known as the budget.
The Bill aims to approve transfers to provinces, municipalities, public entities and other non-profit-making entities mainly for the payment of social grants, and conditional grants.
The National Assembly considered various budget votes and committee reports. However, the adoption of more than a trillion rand of taxpayer’s money through the “Appropriation Bill” became the biggest highlight during a marathon plenary session by lawmakers on Thursday
The main objective of the Bill is to approve the spending of money from the National Revenue Fund for the needs of government for the 2024/2025 financial year, among other things.
Deputy Finance Minister David Masondo says the adoption of the bill will provide for the reduction of government debt.
“The approval by this Parliament of the national assembly of the appropriation bill will grant the legal authority of departments to spend. Honorable members spoke about the problem of the public debt. And we agree with the observations on how the public debt erodes public expenditure. We spent three hundred on debt service costs, money we could be using to finance very important needs of our people.”
Masondo says the more the government increases its revenue, the lesser it depends on borrowing money outside.
“It’s important for us to realize what we call primary budget surplus which is the revenue is supposed to be higher than the expenditure. And in that way, we reduce the budget shortfall and the deficit. And as we do that, we reduce our time to go outside to borrow more money. And as we do that the costs of borrowing become lesser and lesser.”
He says eradicating government debt will pave the way for economic growth.
“Dealing with the public debt is in the interest of economic growth because we borrow this money from the savings of South Africans. This is the money also that should be available to the entrepreneurs, to start their businesses, to grow their businesses. If all these services are stark by the public debt it means entrepreneurs will be capital, money they require to start their businesses, and if money is limited, if the supply is limited, it also means the costs of borrowing, so it is in the interest of dealing with the public debt to grow our economy.”
Maimane says the current fiscal projections for the country are a cause for concern.
“We are looking at an appropriation of over one trillion rand for the 2024/2025 financial year. I think it’s important to paint a picture of what it tells us. It tells us for every R100 that we receive as a government, R60 of it will go to the social wage. R60 of it will go out to the national debt servicing costs. It’s a story of low growth and ultimately debt in this country will peak at R440 billion in 2024, 2025, 2026, 2027. I think the picture before us of fiscal framework that is not sustainable,” says Maimane.
Maimane also expresses concern about low growth levels as a stumbling block.
“Firstly, on the economy deputy minister of finance, I would like to endorse the idea that this administration should think hard about the establishment of the reform of a wealth fund. In this way, we will begin to fund development. I think it cannot be debated that SOEs are faced with a need for better reform and better management. Eskom, Transnet and the South African Post Office must result in better performance in order to improve the global ratings of our economy.
Source: eNCA
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