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Budget Speech News


#Budget2018: Start by trimming the fat, BLSA says

South Africas need to build on the momentum in the country right now by delivering a budget that supports the ambitious but achievable plans announced by President Cyril Ramaphosa in his State of the Nation Address (Sona) last week.
Bonang Mohole, CEO: BLSA
Bonang Mohole, CEO: BLSA

“There is positive sentiment in our country right now. It seems to us that the job of addressing the fiscal gap will be painful, especially to the poorest of the poor, but has to be undertaken regardless. For this, we are sympathetic to the unenviable task the minister of finance has to embark on,” says Bonang Mohale Business Leadership South Africa (BLSA) CEO.

Bloated bureaucracy

Another critical area to address is the public service wage bill, which has consistently exceeded projections. “We are pleased that the reduction of cabinet positions is about to be implemented. It’s important that all of us make sacrifices to reduce costs,” he says.

“The governing party has to start the conversation about moderating wage increases, freezing of vacant posts and other measures before we reach the uncomfortable stage of having to downsize or right-size sections of the public sector. These are unpalatable truths to discuss especially in the run-up to a general election,” said Mohale.

“Also of critical importance, is ensuring that the responsibility of budget formulation is moved from the Presidency as has been reported back to the National Treasury as soon as possible in keeping with the Constitution.”

Areas to address

The budget will also need to provide concrete plans on how government will fund the commitments it has made with regards to higher education, especially for parents who earn a combined R350,000 income a year, whose children will now study for free at first year, without compromising the delivery of social services.

The other area to address is infrastructure spending which has been a key driver of growth over the past decade and, along with sound financial regulations, shielded South Africa from the worst effects of the recession.

“We welcome the efforts of government to fixing the governance, leadership and capital structures of state-owned enterprises (SOEs) to enable them to drive infrastructure spending and create jobs, and hopefully soon we will reach a point where government guarantees are used to support capital expenditure programmes of these SOEs instead of keeping these entities afloat,” Mohale says.

Finally, BLSA has urged government to take advantage of the improved global economic environment by introducing measures to stimulate export-led economic growth.

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