Chairperson, the ACDP broadly supports this important Medium- Term Budget Policy Statement which gives an indication of government income and expenditure over the next few years.
The Minister of Finance has not departed from a prudent and counter- cyclical fiscal policy, notwithstanding the uncertainty prevailing in the US and sovereign debt fears in eurozone countries. This is what Moody's should actually be focusing on.
Fears about out of control government spending in the US and eurozone swept across financial markets again yesterday with stocks and bonds sharply down.
The weaker global economic outlook will undoubtedly negatively impact South Africa's domestic economic growth, especially in the export of our commodities. Domestic economic growth has been revised downwards to 3,1% from the earlier forecasts. Obviously slower growth means lower tax revenues, with Sars expected to be hard-pressed to meet its target. This raises important questions as to the sustainability of the government's present fiscal path.
We as the ACDP, together with all other parties, have previously expressed our concern about the budget deficit, projected state debt stock and spiralling debt service costs. The debt service costs have increased to R76,9 billion and are estimated to rise to R115 billion in the year 2014-15 to service a net loan debt of R1,3 trillion. The size of the budget deficit at present results in debt service costs rising faster than any other category of spending over the medium term, which crowds out spending on developmental priorities.
On the other hand the ACDP understands the need to stimulate economic growth in the short term to create an environment for more sustainable jobs and for additional spending on social welfare, health, education and fighting crime.
It is a difficult balance to strike. It is also imperative for government, if it wants real growth, to create an environment to make South Africa more competitive, efficient and sustainable. The ACDP supports this Medium-Term Budget Policy Statement. I thank you.