Nhlanhla Nene’s Mini Budget: Financial details in a nutshell

Cape Town – Finance Minister Nhlanhla Nene has not strayed much from the more austere fiscal path adopted last year and his Medium Term Budget Policy Statement (MTBPS) tabled in parliament on Wednesday did not contain any big surprises.

Nene is aware of the limited resources at his disposal (the economy has further slowed down). He seems to be honest about the restraints and negative realities, but reluctant to raise taxes. He is prepared to use austerity measures, re-allocations, selling of state assets and the contingency reserves to not let the budget deficit and borrowings creep up. He also recognised the need to get a confident private sector behind the efforts to grow the economy. Nene said at a press conference before his speech that there is no way "this economy can grow if the private sector is not on board".  Let's hope that government as a whole shares his thinking and approach.

The theme of the MTBPS is: "Sustaining progress in a low-growth world". A proposed long-term fiscal guideline will align spending and GDP growth. Nene stressed good fiscal planning and sustainable allocation of public funds, much like in previous budgets. Over the last decade public spending has doubled in real terms.

But as the summary of the MTBPS states: "The resources available to the fiscus are expanding too slowly."

Nene himself appeared annoyed at a press conference about the strain put on government finances by the rising wage increases negotiated with government unions. Salary increases will effectively come to more than 10%, which will mean a shortfall in the current financial year of R12.5bn.

Nene said last year already that big salary increases for civil servants as well as the expansion of the government workforce is not affordable.

@BizNewsCOM @alechogg Don't blame the economy..blame the ANCircus and the Banana Republic they've created!

— Fanie Fourie (@ExpoFanie) October 22, 2015