South Africa faces exceptionally difficult global and domestic economic conditions over the next several years. All the choices are disagreeable, some more than others.
Drawing on the country’s resilience, it is necessary to make tough decisions. The 2016
Budget proposals will return the public finances to a sustainable path. The Budget sets out tax increases and spending reductions to narrow the fiscal deficit and stabilize growth of public debt, while protecting core social and economic programmes. Yet fiscal measures are not enough. To expand the social wage in a sustainable manner, create jobs and reduce poverty, South Africa needs much faster rates of inclusive economic growth. In today’s conditions, doing so requires a sense of common purpose.
The 2016 Budget emphasises both public- and private-sector contributions to development. Over the period ahead, government is stepping up its partnerships with business, labour and civil society to realise the vision of the National Development Plan, and to carry out the reforms needed to transform the economy. Since the tabling of the
October 2015 Medium Term Budget Policy Statement (MTBPS), the global economic crisis has deepened, exposing the depth of South Africa’s external vulnerabilities and the internal constraints that limit its potential for growth.
Taking cognisance of deteriorating global conditions and a weaker domestic economic outlook, government proposes to revise the medium-term expenditure framework
(MTEF). The 2016 Budget proposals will speed up the pace of fiscal consolidation, narrowing the budget deficit more quickly than proposed in October 2015. At the same time, government, working more closely with the private sector, trade unions and civil society, is taking determined steps to restore confidence in the economy, and address structural constraints to economic growth.
The measures proposed in the Budget will require South Africans to share the burden of a necessary adjustment. By acting now to protect the health of the public finances, the country can sustain the progress it has made in social development. By working together to enact economic reforms and co-invest in the future, the stage can be set for faster, inclusive, jobcreating growth as conditions improve.