Less parties, more learning
26 February 2015
Posted by: Author: Antoinette Slabbert
Author: Antoinette Slabbert (Moneyweb)
Finance minister Nhlanhla Nene tried to
apply the brakes on "non-critical” activities, but opened the throttle somewhat
on core service delivery in his medium-term budget tabled in parliament on
Nene said earlier measures to contain
costs and improve the efficiency of government expenditure are yielding
positive results. Economic growth however remains sluggish and substantial debt
repayments are approaching.
Apart from tax measures to increase
revenue, Nene therefore announced several measures to limit expenditure.
He reduced the total expenditure
ceiling by about R25 billion over the next two years, compared to the 2014
expenditure. Consolidated non-interest expenditure will rise from R1.123
trillion this year to R1.4 trillion in 2017/18, which is an average real
increase of 2.1 per cent.
Spending plans have been revised over
the whole of government to ensure greater efficiency, reduced waste and an
improved composition of spending.
The swelling of staff numbers in the
public service will be brought to a halt. Public sector salaries will remain at
about 40 per cent of government’s non-interest spending over the medium term.
Nene repeated that state-owned
companies will not be financed in a way that raises the country’s budget
deficit. He did not, as was generally expected, shed further light on the
assets to be sold to fund government’s R23 billion contribution to the
struggling Eskom. He earlier said it will be a combination of non-strategic
holdings in listed companies, property and other assets still to be identified.
Budget allocations for non-critical
actvities are being reduced. Nene plans to limit growth in allocations for
goods and services to 5 per cent per year through cost containment and
reprioritisation. This includes cutting the budgets for catering, entertainment
and venues by 8 per cent per year. Travel and subsistance budgets will be cut
by 4 per cent per year in real terms.
Expenditure on critical items like school
books and medicine, fuel for police vehicles and infrastructure maintenance
will however grow faster than inflation, Nene said.
Compliance to the austerity measures
will be measured by the Auditor-General.
Nene did provide for a contingency
reserve of R5 billion unallocated funds for 2015/16, increasing to R15 billion
and R45 billion in the next two periods. This, he said, was done against the
background of an uncertain economic outlook and possible weaker growth and
rising interest rates. He also noted that public service wage
negotiations have not yet been concluded.
This article first appeared on moneyweb.co.za