SA must take a ‘bold step' towards fiscal sustainability

The re-evaluation of govenrment spending, although much needed, will not be enough to address South Africa’s immense economic challenges. There also needs to be stronger political will and leadership from government to address poor implementation, writes Dr John Purchase, CEO of the Agricultural Business Chamber.

- Dr John Purchase

In his Supplementary Budget Speech in June, Minister of Finance, Tito Mboweni, indicated that government would adopt a zero-based approach to budgeting.

This would essentially mean that the budget is created from scratch every year, rather than using the previous year’s budget as the starting point. All government departments will have to justify all their expenses and will need to show that their programmes and actions will be worth the money allocated thereto.

Mboweni is set to deliver the Medium-Term Budget Policy Statement (MTBPS) at the end of October, and this will be one of the most defining moments for South Africa and its economy over the past two decades. The COVID-19 pandemic erupted when South Africa was already in a weak fiscal position, following years of growing debt and weak economic growth.

STABILISING DEBT