When he delivered the supplementary budget before the hybrid sitting of the National Assembly (NA) today, the Minister of Finance, Mr Tito Mboweni, said the Public Finance Management Act, read together with the Money Bills Amendment Procedure and Related Matters Act, empowers him as the Minister of Finance, to table an adjustment budget when necessary.
He said: “The historic nature of this pandemic and economic downturn has made it necessary to table such an adjustment. We will table a second adjustment budget in October together with the Medium Term Budget Policy Statement.”
According to Mr Mboweni, the supplementary budget does two things, the first, he said, it brings an Adjustments Appropriation Bill and a Division of Revenue Amendment Bill to the House, and secondly, it formalises the two tax Bills to give effect to the government’s response.
He said the Bills ask Parliament to approve the response package for Covid‐19, not merely return the economy to where it was before the coronavirus, but to forge a new economy in a new global reality. “This supplementary budget sets out a roadmap to stabilise debt, by improving our spending patterns, and creating a foundation for economic revival.”
He said most of the government’s energies and resources have been focused on the Covid‐19 pandemic. “We have quickly adopted temporary counter-cyclical fiscal and monetary policy measures,’ he said.
He said after the storm of Covid-19, “we must work just as quickly to emerge with a sustainable fiscus”. He said South Africa has many strengths and those strengths include the country’s young and ambitious people, institutions, a robust and vibrant democracy, independent judiciary and our commitment to social justice progress; and economic strengths: a diverse industrial base, a flexible exchange rate, stable inflation, and deep domestic capital markets that allow us to borrow mainly in rands.
He said debt is South Africa’s weakness. He added: “We have accumulated far too much debt; this downturn will add more. This year, out of every rand that we pay in tax, 21 cents goes to paying the interest on our past debts.”
He said that indebtedness condemns the country to ever higher interest rates. “If we reduce debt, we will reduce interest rates for everyone and we will unleash investment and growth.”
He told NA MPs that he tabled the supplementary budget with an eye on the future: “We set out a strategy to build a bridge to recovery. Our herculean task is to close the mouth of the hippopotamus. It is eating our children’s inheritance. We need to stop it now. Our herculean task is to stabilise debt.”
By Mava Lukani
24 June 2020