Nene: Govt first to tighten belt

2014-10-22 16:32 - Jaco Leuvennink
Nhlanhla Nene
Nhlanhla Nene (Picture: AFP) ~ Grocott's Mail
Cape Town - Finance Minister Nhlanhla Nene’s comprehensive package of measures to narrow the budget deficit, stabilise debt and begin to rebuild fiscal space, will reassure conservatives that he acknowledges the need for prudence on the government’s side.

To reduce the budget deficit (and borrowing needs) from 4.1% this year to 2.5% over the next three years, the expenditure ceiling will be lowered by R10bn in the next financial year and R15bn in 2016 to 2017. Nene would not give more details on saving except that in general it will include:

 - A freeze on budgets of non-essential goods and services at current levels;
 - Withdrawing of funding for posts that have been vacant in the civil service for some time; and
 - Reducing the rate of growth of transfers to public entities, particularly those with cash reserves.

Across national departments planned expenditure on travel and subsistence, conference venues and catering has been cut, Nene said.

Advertising and communications budgets have also been reduced and consultant services been capped. Altogether these steps will contribute savings of about R1.3bn over the next two years.

Nene said at a press conference before his speech in the National Assembly that he wants to be very clear "about the impact of what we are doing", as it might have, together with the impact of higher taxes, a mild dampening effect on growth in the short term.

"Firstly we remain resolute to protect the poor. So pro-poor spending on social services has been protected."

"Secondly, our infrastructure investment drive remains fully on track."

"Thirdly, public employment programmes continue to grow fairly strongly in the period ahead."

Nene said the consolidation, in contrast to previous years’ expansionary budgets, are absolutely necessary to "place our fiscal accounts on a firm footing and to protect the gains we have made.

"Combined with various micro-economic interventions the fiscal proposals are necessary to sustain social progress and to move the economy onto a new and more sustainable development path."

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