The Standing Committee on Finance together with the Select Committee on Finance are a step closer to completing the process of considering the 2020 Revised Fiscal Framework, which was presented in a speech to a hybrid sitting of the National Assembly by the Minister of Finance, Mr Tito Mboweni, on 24 June 2020.
In his revised budget speech, Minister Mboweni said that government is committed to stabilising debt through a zero-based budgeting principle. He said: “Government will narrow the deficit and stabilise debt at 87.4 percent of gross domestic product in 2023/24. Cabinet has also adopted a target of a primary surplus by 2023/24.”
Subsequently on 25 June 2020, Minister Mboweni and the National Treasury management briefed the committees on the revised budget. The committees were also briefed on the same subject matter by the Parliamentary Budget Office (PBO) and the Financial and Fiscal Commission (FFC) on 29 June 2020.
The PBO held a view that talk of fiscal consolidation at this time in the crisis is inappropriate. Rather, the government should consider the development of fiscal resilience, by more rapidly investing in automatic stabilisers. According to the PBO, automatic stabilisers include government-funded national health insurance, and wider and deeper welfare nets.
The FFC also held the view that budget adjustment is inevitable in the context of the devastating pandemic, low economic growth, and revenues are critically diminished. Economic growth stimulation must be the centre of debt reduction, the FFC argued, since inadequate revenue is the largest driver of the burgeoning deficit.
Additionally, the committees held virtual public hearings on 30 June 2020, in which a number of organisations presented oral submissions on the 2020 Revised Fiscal Framework, including the Congress of South African Trade Unions, the Institute of South African Chattered Accountants, the Organisation Undoing Tax Abuse, the Fiscal Cliff Study Group, Civil Society Organisation, Accountability Now and the Justice Budget Coalition. The submissions were followed by a response from the National Treasury on Friday, 3 July 2020.
The committees will meet on Tuesday, 7 July, to deliberate and consider a report, highlighting observations and recommendations. Co-Chairperson Mr Joe Maswanganyi reiterated that in their deliberations, the committees should take into account recommendations made by the PBO and the FFC.
“The country is in a situation where its economy and revenue collection continue to decline. It is high time the state assumes a leading role to drive economic recovery, because the responsibility cannot only be left in the hands of the private sector,” said Mr Maswanganyi.
3 July 2020