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Cape Town – Cabinet has welcomed Finance Minister Malusi Gigaba’s mini budget delivered last week in Cape Town, for its commitment to "inclusive growth and fiscal consolidation”.
Reading from an official statement issued after Wednesday's Cabinet meeting, Communications Minister Mmamoloko Kubayi said Gigaba's maiden mini budget continued to promote social expenditure on education, health, basic infrastructure and social security amid a tight fiscal space.
“Cabinet calls on all South Africans to join increased efforts to grow the economy,” the statement read. However, like the mini budget, it fell short of stipulating how government plans to grow the economy.
Cabinet's positive stance on the mini budget stands in stark contrast to sentiments expressed by economists, rating agencies and analysts, who have criticised the finance minister for a his lack of clarity on how to put the country back on a growth trajectory, and for deviating from fiscal consolidation.
READ: Fitch has little faith in SA post mini budget
Ratings agency Moody’s said in a statement earlier this week that the mini budget was the first SA fiscal policy document - such as a budget or mini-budget - over the past several years that did not have the objective of fiscal consolidation.
Fitch, another ratings agency, also noted the mini budget signaled a move away from fiscal consolidation – something it had anticipated following the March Cabinet reshuffle, which saw former finance minister Pravin Gordhan removed from office.
Similarly, economists warned post-budget that it provided no indication of a growth plan, or adherence to expenditure ceilings.
Expenditure ceiling
Gigaba had admitted in his address to Parliament that SA runs the risk of breaching its expenditure ceiling by R3.9bn, unless government sells some of its shares in assets, such as Telkom.
READ: Gigaba: We couldn't tell people everything is fine
The Finance Minister has since defended the mini budget, saying government couldn’t pretend "everything was fine" and that he had no choice but to deliver an honest and candid message.
"The majority of South Africans appreciated that the story was told as it is. If you want to play tricks because you want to see good headlines and read good stories and reviews of the lies you’ve told – then you go and say 'all is well',” Gigaba told a Parliamentary briefing a day after his address.
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