Trying to achieve growth via austerity — cuts to basic services and other critical areas of spending — is like trying to drive uphill with the handbrake on.
It was welcome to see the National Treasury’s marked departure from the drumbeat of a looming “fiscal crisis” that has been repeatedover the past two months. This “fiscal crisis” was almost completely absent from Finance Minister Enoch Godongwana’s speech and associated MTBPS analysis.
Similarly, although the debt-to-GDP ratio forecasts increase, this is not portrayed as pushing us over a mythical “fiscal cliff”. Rather, following the approach taken by the IEJ in recent months, the high cost of debt servicing is identified as a key fiscal concern. Unfortunately, the MTBPS offers no direct measures to reduce the cost of borrowing.
In the medium term , the government aims to decrease real spending on basic education and healthcare by R16-billion and R14-billion, respectively. This means spending per enrolled learner will fall, in real terms, from R25,387 in 2022/23 to R23,363 in 2026/27. It also means that while each public healthcare recipient was receiving an average of R5,326 in 2022/23, by 2026/27 this will fall to R4,525 in real terms.and previous years.
This underspend does not reflect lower levels of need but rather how the government has deliberately excluded eligible applicants. Due to pressure from the National Treasury to keep recipient numbers artificially low, the DSD has put in place regulatory and procedural hurdles to access. This has given the National Treasury exactly what it wanted, an excuse to slash the grant’s budget even further. This is heartless and unconstitutional.over this injustice.
While the increased spending on economic regulation and infrastructure is welcome, total medium-term spending cuts will undermine development through a real decline in spending on job creation , industrialisation and trade , agriculture and rural development , and innovation, science, and technology . The MTBPS cuts these non-infrastructure development priorities by R9-billion next year while increasing infrastructure and regulation spending by R7-billion in real terms.
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