NATIONAL COUNCIL OF PROVINCES
QUESTION FOR WRITTEN REPLY
QUESTION NUMBER 206
Mr M W Makhubela (COPE-Limpopo) to ask the Minister of Finance
(1) Whether the Government has been informed that countries in the
Eurozone were experiencing acute economic problems which could impact
negatively on South Africa; if so, what are the relevant details;
(2) Whether the Government is considering further austerity measures to
curb the indebtedness; if not, why not; if so, what measures will be
put in place in this regard?
CW277E
REPLY:
(1) Government has been closely following the recent events in
Europe. South Africaâs relatively low debt and prudent countercyclical
management of the fiscus has meant that we are not facing similar
problems. The projections for the 2010 MTEF place South Africa on a
path back towards long-term fiscal recovery and in line with economic
recovery.
(2) South Africaâs debt levels are very low by European standards.
Prudent management of the fiscus and low debt levels in 2008/09 meant
that South Africa was able to respond appropriately to the revenue
shortfall in 2009/10 without bringing into question the sustainability
of the South African fiscus or jeopardising service delivery.
We plotted a reduction of the budget deficit over the next 3
years in the 2010 Budget Review. This carefully balances the need to;
sustain priority areas of expenditure and service delivery; provide
stimulus to the economy; and return the fiscus to long-run
sustainability in line with the economic recovery.
Non-interest expenditure is projected to grow on average, in real
terms, by 1 per cent over the next three years, while revenue is
expected to improve as the economy moves out of recession. Government
will act to reduce debt and borrowing in line with this recovery.
As part of the 2010 Budget, the National Treasury also published
debt projections beyond the 2010 MTEF. These were modelled using a
wide range of economic circumstances, and also indicated that the
probability of debt reaching unsustainable levels is very low - even
assuming far lower economic growth outcomes than expected.
The problems facing Europe were not foreseen at the time we published
the 2010Â Budget Review. For this reason we will be taking careful
consideration of the possible impact of the crisis on South Africaâs
growth trajectory and ability to access financing as we work to
prepare the 2011 MTEF. The updated forecasts for the macroeconomic and
fiscal position will be published in October during the tabling of the
Medium Term Budget Policy Statement in Parliament.