Chairperson, Deputy President and hon Minister, the ACDP supports the Medium-Term Budget Policy Statement. In our view, the Minister of Finance has not departed from a prudent, countercyclical fiscal policy, this notwithstanding the uncertain global economic outlook, as well as domestic challenges arising, inter alia, from the recent illegal strike action in the mining sector. This, we believe, sends a clear message to reassure investors and credit rating agencies that National Treasury will not deviate from its trademark fiscal conservatism, notwithstanding political pressure from various quarters. The challenge will obviously be implementation amidst opposition from other quarters.
It is clear, however, that economic growth is not near the levels required to address widespread unemployment. This we are all in agreement with. In this regard, the policy statement must be closely aligned to the National Development Plan which identified constraints to economic growth. We are pleased that there were 14 references in the policy statement to the National Development Plan.
It is also commendable that government will keep expenditure at the February 2012 budget-baseline positions. New activities have to be funded through savings, reprioritisation and a reduction in wasteful expenditure. This, clearly, the ACDP supports. The short-term need for fiscal stimulus, through, inter alia, the infrastructure development programme, must be balanced with the medium-term need to consolidate the fiscal position, as the economy improves.
We all agree that the primary risk to the fiscal outlook remains lower-than- expected GDP growth. The weaker global economic outlook, together with the fallout from the illegal strikes in the mining sector, has had a negative impact on our domestic economic growth forecasts, with growth being revised downwards to 2,5% from an earlier forecast of 2,7%. Clearly, that means lower tax revenues, with Sars expected to be hard-pressed to meet its target, which has already been decreased by R5 billion. This, again, raises important questions as to the sustainability of the government's present fiscal path over the medium term.
We note, however, that the budget deficit of 4,8% is only slightly higher than the forecast of 4,6% in February and that this trend continues over the medium term. This is understandable, given the slower economic growth, and we can be grateful that the deficit is not much higher. Any drastic deviation from the fiscal consolidation path could spark another credit rating downgrade.
We did express our concerns about the budget deficit, the projected state debt stock and spiralling debt service costs. Compared to developed countries, we are in a better position but, as has been pointed out, as far as emerging nations are concerned, we are not in as positive a position as we should be. The ACDP will support this policy statement. I thank you. [Time expired.] [Applause.]