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Mboweni positive on SA economy as Parly approves MTBPS fiscal framework

Separate sittings of the National Assembly and the National Council of Provinces (NCOP) on Wednesday gave the green light.

Finance Minister Tito Mboweni delivers his Medium-Term Budget Policy Speech in Parliament on 28 October 2020 in Cape Town. Picture: GCIS

CAPE TOWN - Parliament has approved the fiscal framework tabled by Finance Minister Tito Mboweni with the Medium-Term Budget Policy Statement last month.

Separate sittings of the National Assembly and the National Council of Provinces (NCOP) on Wednesday gave the green light.

In the National Assembly, red flags were raised over the R10.5 billion for national carrier SAA’s business rescue process, to which local government will effectively be contributing around R569 million.

The Standing Committee on Finance wants the impact of cuts to government spending to be monitored and has called for due process to be followed in negotiations with public sector unions over the wage bill.

Wrapping the debate, Finance Minister Tito Mboweni still found room to be positive, despite the global economy being in recession and South Africa’s set to shrink by nearly 8%, according to Treasury’s forecast.

"Already, we can see some green shoots in parts of the economy – in manufacturing, in mining, in wholesale and retail trade. Agriculture obviously stays afloat.

"We can see evidence of green shoots in transport and logistics and other activities, so if we continue along the path of driving through our reconstruction and recovery programme, we stand a good chance of a bounce-back in 2021, which is good news."

Mboweni said that the government was worried about the funding gap caused by a revenue shortfall he said was now around R322bn.

"If we don’t do anything about fiscal consolidation, we run the real risk that we are going to face a debt to GDP ratio of over 100% in the next three to four years. So, we need to do something to consolidate our fiscal position.

"Therefore, the principal conversation in this Medium-Term Budget Policy Statement has been fiscal consolidation, support for the economic reconstruction and recovery programme and making sure we rein in the debt."

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