Document - Medium Term Budget Policy Statement; 1 November 2023
Honourable Speaker, Nosiviwe Mapisa-Nqakula His Excellency, President Cyril Ramaphosa;Members of the Executive Committees for Finance Honourable Members;The Commissioner of the South African Revenue Service Fellow South Africans;Madam speaker, allow me to join the President and the nation in congratulating the Springboks on winning the 2023 Rugby World Cup for a record fourth time.
Reconfigure the structure and size of the state, while strengthening its capacity to deliver quality public services. This year we hosted the Formula-E, the BRICS Summit, the Netball World Cup 2023, and this week we welcome up to 700 delegates to the 20th AGOA Forum in Johannesburg. The main reasons for this are a sharp fall in corporate income tax, particularly from the mining sector, although personal income tax collection was better than forecast.
SARS will continue its focus on enforcing compliance in areas such as debt collection, fraud prevention, curbing illicit trade, voluntary disclosures, and encouraging honest taxpayers to comply voluntarily.Government spending has exceeded revenue since the 2008 global financial crisis. These rising annual budget deficits have reached an extent where the government will have to borrow an average of R553 billion per year over the medium term.
It is important, however, to point out that our debt levels and rising debt service costs are not problems in and of themselves. None of these decisions are taken lightly. They are taken with the short- and long-term viability of public finances in mind, and in the interests of balanced and inclusive growth.
This plan will address overlapping mandates and functions, including in public entities, and ensure that we create standards for more sustainable remuneration of executives that serve public entities receiving transfers from the fiscus.Fiscal consolidation The MTBPS also recognises that government must respect the budget constraint, to preserve sustainability of government services that are being crowded out by debt- service costs.
Government has made a strategic decision to allocate funds to frontline sectors such as Health, Education and Police Services. Over the next three years, government proposes allocating 48 per cent of available non-interest spending to national departments, 42.1 per cent to provinces, and 9.9 per cent to local government.
These changes include reconfiguring of grants and revising the grant conditions, to align them with the Green Drop, Blue Drop, and No Drop assessments relaunched by the President in as part of efforts to ramp up the performance of water service authorities. Madam Speaker, mitigating the environmental risks posed by climate change must go hand-in-hand with addressing the financial and economic risks also posed by climate change.
These conditions include enforcing strict credit controls, enhanced revenue collection, and up-to-date payment of monthly current account owed to Eskom. This MTBPS supports measures to lift our growth prospects over the medium term and restructures the state to become more effective. At the same time, we recognise the potential loss of revenue due to private electricity generation, and the fact that traditional revenue models relied on by public entities like Eskom, face serious disruption.
Madam speaker, as part of the 2023 Budget, we announced the Eskom debt relief amounting to R254 billion from 2023/24 to 2025/26.The first was to ease pressure on the company's balance sheet and free it to invest in transmission and distribution infrastructure. The Eskom Debt Relief Amendment Bill which we are tabling today seeks to enhance the enforceability of the conditions agreed under the debt relief agreement.
This involves assessing policy conditions, challenges, and opportunities for diversification and investing in new industries. The goal is to make sure the sector remains a major contributor to the industrial development of the domestic economy. This approach is consistent with the key lesson from our reform of the electricity sector, that resolving these challenges must be based on transforming the sector, and not trying to save an entity.
Recognising the seriousness of the situation, the National Treasury is working with Transnet and the Department of Public Enterprises to ensure that Transnet can meet its immediate debt obligations.The Roadmap sets out a clear path for enhancing efficiencies, facilitating the introduction of competition and leveraging the financial and technical support of the private sector.
Among the challenges is the lack of a credible pipeline that can attract funding, lack of sustainable financing arrangements to crowd-in private finances, and poor contract and project management to manage cost and schedule overruns. This will include the use of build-operate-transfer structures, PPPs and concessions, and application of the frontloading mechanism which provincial conditional grants now allows for.
The public has been afforded an opportunity to submit written comments followed by public hearings that were conducted through parliamentary process during September. We have reviewed these instructions with a view to relaxing them to unlock bottlenecks in the system. Since February, when South Africa was greylisted by the Financial Action Task Force , a large number of government departments and agencies - including the police the Hawks, NPA, SIU, SSA, the Reserve Bank, FSCA, and SARS - have been working hard to address these deficiencies.
The South African Police Service, The Defense Force, the Financial Intelligence Centre, the Department of Home Affairs and the Border Management Authority have all received allocations from this fund.We are also improving the legislative environment in areas such as financial management and financial governance. These reforms will respond to the recommendations of the Zondo Commission, the Mpati Commission, and the Nugent Commission.
In summary, the Medium-Term Budget Policy Statement commits government to continue to support the economy, stabilise public finances and protect the social wage.Fast tracking the implementation of structural reforms, key being in the electricity and logistics sectors, to lift our growth prospects. I would like to thank Mr Ismail Momoniat for his sterling contribution during his 29- years of service in the National Treasury in many roles, most recently as Acting Director-General.
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