Business Unity South Africa (BUSA) is hopeful that this week’s Budget Speech by the Minister of Finance Pravin Gordhan will emphasise the fiscal balance required for South Africa to facilitate investment and achieve inclusive growth in order to meet the country’s developmental objectives.
“A balanced budget that incorporates cost containment measures with sustainable, and where necessary, limited, yet progressively designed, tax increases is the only way of sustaining the long-term government’s pro-poor, pro-growth policies, while keeping the economy afloat,” stated BUSA CEO Tanya Cohen.
Balancing a pro-poor Budget requires further fiscal consolidation
Business expects the Budget to demonstrate further efforts to ensure fiscal consolidation. “Maintaining a balanced Budget requires, in addition to moderate and carefully targeted revenue increases, further efforts towards fiscal consolidation. This includes pursuing greater efficiencies across Government departments, as well as cost containment measures, eradicating wasteful and fruitless expenditure and in particular curtailing losses of State-owned Enterprises (SoEs),” said Cohen.
Cost containment in relation to SOEs is a critical focus for the Budget
Business remains profoundly concerned about continued loss-making by SoEs and applicable guarantees by Treasury.
BUSA CEO Tanya Cohen said: “We note the commitments made by Government in the 2016 Budget pertaining to improved governance and cost containment on operations in SOEs. We are hopeful that the Budget will give greater effect to these commitments.”
Balancing a pro-poor, pro-inclusive growth Budget requires considered and careful tax increases
BUSA expects that revenue increases to balance the budget will be in line with the October 2016 Medium Term Budget Policy Statement. The revenue shortfall will require increases in certain taxes – this must be given effect to in a manner that is pro-poor and pro-inclusive growth.
BUSA CEO Tanya Cohen said, “Whilst business recognises that increases in certain taxes are required, the inability to grow the economy inclusively and to create sustainable employment means that such increases need to be kept to a minimum. They should not be extracted in such a way as to deter investment in the economy. ”
Balancing the Budget requires an environment conducive to private investment
BUSA is confident that Treasury will strike the appropriate balance between fiscal prudence and building on the advances made in social and economic transformation since 1994.
BUSA President Jabu Mabuza said: “There is a limit to what can be achieved by the Minister of Finance and through the budget. The real issue is to ensure that our economy grows adequately on an inclusive and sustainable basis. In the last 12 months Team SA has done remarkably well to “hold the centre”, maintain our investment grade rating, and sustain and service government borrowing. But more action is needed to pursue a stable, predictable, policy and fiscal environment that stimulates investment. Business is ready to play its part and we are hopeful that the Budget will help create an environment where that can be sustainably achieved.”