The Minister of Finance briefed the Standing Committee on Finance, the Standing Committee on Appropriations, the Select Committee on Finance and the Select Committee on Appropriations on the Medium-Term Budget Policy Statement (MTBPS).
The briefing to the National Assembly and the National Council of Provinces Finance and Appropriations committees comes after the Minister of Finance, Mr Enoch Godongwana, tabled the 2022 MTBPS in Parliament yesterday.
Mr Godongwana said the government is trying to manage trade-offs in the current economic environment, in the face of increased government spending on state-owned enterprises (SOEs) and social grants. SOE bailouts have had a negative impact on government spending, especially on frontline services, he said.
Despite these challenges, the government is working on interventions to divert public money away from bailouts towards infrastructure development, education and fighting crime. Mr Godongwana assured his audience that the government has employed 10 000 police officers in the current year, with plans to employ 15 000 more over the next few years.
In terms of the medium-term expenditure outlook, National Treasury proposed additions over the next two years to cover:
R66.9 billion for health, education and provision of free basic services by local government, and a one-year extension of the Covid-19 social relief of distress grant.
R8.9 billion for safety and security.
R11.3 billion for infrastructure investment, including rehabilitating damaged municipal infrastructure and refurbishing provincial roads.
Committee members were concerned that over many years some SOEs have failed to present annual reports, as required by the Public Finance Management Amendment Act. They asked the Minister how they can be expected to believe that SOEs will spend their budgets wisely, if basics, such as compliance with legislation, cannot be adhered to.
Mr Godongwana replied that the government is in the process of restoring the health of the public finances in the face of a global slowdown, despite high levels of economic risk and fiscal distress, especially for developing countries.
The committees were of the view that repeated government bailouts of SOEs have not yielded any noticeable improvement over the years. They therefore welcomed the new stringent conditions attached to bailouts announced by the Minister. However, they were still concerned that Eskom will require further bailouts in future.
The committees also asked about the Gauteng Freeway Improvement Project and arrangements around how its debt would be divided between the Gauteng provincial government and national government. In his speech, the Minister announced that the South African National Road Agency’s debt related to the project would be split 70/30 to address complications arising from the payment of e-tolls.
Committee members welcomed the one-year extension of the SRD grant. The Minister of Finance clarified that the grant should not be confused with a basic income grant, as there is no government policy regulating such a grant. The SRD grant is a temporary arrangement, initially set up to deal with Covid-19-related challenges and is not a basic income grant.
Jabulani Majozi
27 October 2022
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