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THE PRESIDENCY: REPUBLIC OF SOUTH AFRICA
Private Bag X1000, Pretoria, 0001
NATIONAL ASSEMBLY
QUESTION FOR WRITTEN REPLY
1073. Mr M G P Lekota (Cope) to ask the President of the Republic:
Whether he has found that the escalation of the national debt from
27% of the Gross Domestic Product in 2008 to 45% or more estimated
for 2015 has eroded fiscal space within which to make the radical
socioeconomic transformation he referred to during his inauguration
speech on 24 May 2014 impossible to realise; if not, what funding
mechanisms and strategies are still available to the Government to
deliver economic liberation for the poor in the next four years?
NW1243E
REPLY:
The increase in national debt relative to GDP reflects the adoption of a
counter-cyclical strategy in response to the global economic crisis in
2008/9. If we had simply cut spending in response to the fall in revenue
during the crisis, the economy is unlikely to have recovered from the
recession.
In order to take account of the more limited fiscal space, we have
identified a number of measures to use in order to enable radical social-
economic transformation. They include:
1. Emphasising local procurement, aiming to ensure that at least 75% of all
government purchases are locally produced. This approach ensures that our
spending has the greatest possible multiplier effect in terms of
employment, investment and growth.
2. Re-prioritising government spending to make sure that it supports more
inclusive and sustainable growth. This has in particular meant shifting
resources toward infrastructure and improving the impact of the critical
services of health, education and policing.
3. Through the infrastructure build programme, we are mobilising increased
investment off-budget, through our state-owned companies and development
finance institutions. The effect is both to transform our economy and to
provide an increased stimulus without increasing government debt.
In addition to these measures, we are pursuing steps that can improve both
inclusive growth and revenue generation in order to achieve governmentâs
overall plan.