Madam Speaker, hon Minister, the ACDP supports this pragmatic and stimulatory Budget which is presented under extremely difficult economic conditions, both globally and domestically. The fiscal deficit of R95,6 billion is necessary under the present circumstances by expanding government's contribution to the economy. The fiscus is able to support economic activity at a time when global and domestic demand is faltering.
While the 3,8% budgeted deficit is higher than the preferred level, it can be supported if there is a clear and sustainable path to a return to balance budgeting. However, large budget deficits are not sustainable in the long run as they can result in government having to borrow money to pay interest on debts, should government saving and the budget balance remain in negative territory.
The ACDP welcomes the focus on the Budget, particularly on increased expenditure on enhancing the quality of education, improving health care, fighting crime, delivering housing, water, electricity and sanitation, and addressing unemployment and poverty. It is also remarkable that in difficult times, hon Minister, you find space for substantial individual tax relief, for which we can all be thankful. The other good news amongst the gloom is the projection of a lowering current account deficit. It is noteworthy that during January this year, international capital flows to South Africa were on the positive side for the first time since mid-2008. Added to this is the possible World Bank loan to Eskom amounting to US$5 billion.
Additional good news is that economic activity is expected to start recovering in the second half of the year in response to declining debt levels, lower interest rates and a more expansionary fiscal policy. The looming domestic recession, however, has necessitated steps to immediately stimulate economic growth. The huge public spending on infrastructure, roads, ports, railways, etc, will accelerate growth, create jobs and position the country to take advantage of the next positive economic cycle, and the ACDP supports these moves.
We are, however, concerned with the lack of service delivery and underperforming managers in various departments, with 11 government departments receiving qualified audits in the 2006-07 financial year. In this regard, we fully endorse the Minister's call for a comprehensive expenditure review. There is very clearly a need to assess all government programmes to see how we can improve value for money and to identify errors where we can eliminate and reduce wastage. We agree that as we spend more, we must also spend better.
In conclusion, the ACDP commends the Minister on what must have been one of the toughest Budgets that he has had to present. He has stuck with the countercyclical strategy introduced two years ago. He has tried to stimulate economic growth against the effects of collapsing global demand and sharply lower prices for local resources. He will, undoubtedly, be remembered for the legacy he has built up of prudent fiscal policy, saving for a rainy day. That rainy day has now arrived and we, as the ACDP, welcome the loosening of Treasury's purse strings. I thank you.