Deputy Speaker and Deputy President, the ACDP broadly supports this important MTBPS which gives an indication of government income and expenditure over the next three years. Most analysts believe that the hon Minister of Finance produced the best policy statement that he could, notwithstanding the uncertain global economic outlook, as well as domestic challenges arising, inter alia, from the strike action in the mining, motoring and transport sectors.
The government's countercyclical fiscal policy is firmly aligned with the National Development Plan. We in the ACDP support this, because it provides policy certainty. It also sends a very clear message to trade union movements, such as Cosatu, that the development plan is to be implemented. It also sends a message to reassure investors and credit rating agencies that the National Treasury will not deviate from trademark fiscal conservatism, notwithstanding political pressure, particularly from various quarters and the trade union movements.
This should be the narrative that we speak when we speak out: Yes, we do have many challenges, but it is very important that as we focus on those challenges, we also focus on what other economic analysts are saying, that this medium-term Budget is positive.
On the downside, we know that the weaker global economic outlook, together with fallout from the strikes, has impacted negatively on our economic growth forecasts, which are now down to 2,1% of the GDP, down from earlier forecasts. However, let us also be thankful. There are many countries that have no economic growth, such as we see in Europe.
Whilst we have lower growth, we also have lower tax revenues, and Sars is going to be hard pressed to meet its target. I hope that all Members of Parliament have filed their returns and that they are up to date with their taxes.
We also see the risk of the unwinding of quantitative easing in the US. That will impact on emerging markets and will further impact on our trade account deficit, as we rely heavily on external funding to meet obligations in that regard.
As a country we need to continue increasing exports where possible, particularly where our country has natural endowments and comparative advantages, such as in mining and manufacturing, to counter this risk. Clearly, we need policy certainty in those areas as well.
We in the ACDP have previously expressed concerns about the budget deficit, the projected state debt costs and the spiralling debt service costs. We need to look very carefully at the fiscal consolidation path. We are relatively on track. However, the year is now moved outward in the estimation of when we are going to reach that 3%; it is moved outward to 2016-17. We are relatively on track, and we need to monitor that very carefully. The size of the budget deficit, as we know, results in debt service costs increasing faster than any other category of spending, and that crowds out spending on developmental priorities. This we need to monitor very closely, from our side, to ensure that fiscal consolidation is on track.
The ACDP will support this Medium-Term Budget Policy Statement. I thank you. [Applause.]