Finance Minister Enoch Godongwana has described the Medium-Term Budget Policy Statement as one of the most difficult policy statements they had to navigate through given the lower-than-projected revenue, which forced government to cut spending.
This situation has also had an impact on the allocations to departments, and they had to re-arrange budgets for departments.
National Treasury Director-General Duncan Pieterse said the underperformance of Transnet has had a negative impact on the economy.
Eskom’s load shedding also hampered economic growth in the last financial year.
Godongwana, who was briefing the joint committees on finance and appropriations in Parliament on Thursday, said the Medium-Term Budget Policy Statement had to take into consideration the difficult climate the economy was faced with.
Lower than expected revenue collection left a huge gap on the fiscus.
“What we are dealing with is one of the most difficult Medium-Term Budget Policy Statements. The key issue is that at the time of the Budget (in February), we projected certain numbers on revenue forecast. On the basis of revenue forecasted, we did allocations. However, the revenue forecast has now changed. What are the implications of that? What we then did was to re-arrange the allocations,” said Godongwana.
He said they did not only re-arrange spending, but they borrowed money from the markets, and this has pushed the deficit from 4% to 4.9%.
Pieterse said the poor performance of key State-Owned Entities, Transnet and Eskom, also played a role in low economic growth.
He said the fact that more goods were not on the rail tracks has led to lower growth.
President Cyril Ramaphosa set up a logistics task team to revive the logistics sector.
Minister of Public Enterprises Pravin Gordhan told Parliament recently that volumes on the rail declined from 226 million tonnes to 149 million tonnes in the last few years.
They wanted to revive the rail network to get more volumes.
Pieterse said the task of the National Logistics Crisis Committee was to ensure that Transnet improved its performance.
He told the joint committees on finance and appropriations that the network industries have to jack up their performance to revive the economy.
“The two key factors that are drawing low growth but also driving lower revenue are really the underperformance in our network industries. Transnet’s declining rail performance is really having an impact on the economy and on the ability of our exporters to get their goods to the market.
“The National Logistics Crisis Committee aims to improve the operational performance of freight rail and ports and implement those reforms to ensure we have an efficient, competitive, and modern freight system. We have seen higher power cuts this year up to September than we have seen in the whole of 2022,” said Pieterse.
He said they expected 11 000 MW of renewable energy to be added to the grid, and this would stabilise electricity supply and contribute to economic growth.
Pieterse said if they can fix Transnet and Eskom, the economy will get back on its feet.
Politics