Chairperson, the ACDP supports the revised Fiscal Framework. In our view, the Minister of Finance has not departed from a prudent, yet expansionary and countercyclical fiscal policy - it is quite a mouthful. This is notwithstanding the very uncertain global economic outlook, as well as domestic challenges arising, inter alia, from the illegal strike action in the mining sector.
We believe the Fiscal Framework sends a very clear message to reassure jittery foreign and domestic 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 be implementation amidst opposition from within the ruling alliance, particularly as it was pointed out by other speakers regarding economic policy, with the youth wage subsidy being one example of this.
The report contains a number of recommendations which the ACDP supports. It is of great concern that foreign direct investment has dropped by 44%. The report states that the country needs to do more - I would say a lot more - in terms of stabilising the political environment and resolving labour disputes to address this.
The report also makes it clear that economic growth is not near the levels required to address widespread unemployment. In this regard, it is very clear that the Fiscal Framework must be closely aligned to the National Development Plan, NDP, which identified constraints to economic growth as well as solutions.
Again, the question of implementation of the NDP is critical. The primary risk to our fiscal outlook remains lower than expected GDP growth. Slow growth of 2,5% means lower tax revenues, and we see our revenues revised downwards by R5 billion. This raises important questions as to the sustainability of government's present fiscal path over the medium term.
We note, however, and commend the Minister that the budget deficit is 4,8% - it is only slightly higher than forecast in February - and that this trend continues over the medium term. Any drastic deviation from the fiscal consolidation path could spark another credit rating downgrade, and that we do not need.
Lastly, the ACDP believes it is imperative to ensure that the fiscal guidelines are strictly adhered to by government. They should be, because they come from National Treasury. These include a countercyclical approach, debt sustainability and intergenerational equity. The fiscal stance should target medium-term debt consolidation with moderate expenditure growth to support economic growth and sustain the social wage. The ACDP will support this revised Fiscal Framework. I thank you.
Motion agreed to.
Report accordingly adopted.