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Nigel Ward - Comment on 2020 supplementary budget speech
The Durban Chamber of Commerce and Industry welcomes the opportunity to comment on the 2020 Supplementary Budget Speech delivered by the Honourable,
Mr Tito Titus Mboweni, Minister of Finance of the Republic of South Africa, on Wednesday, 24 June 2020.
With the South African economy expected to contract by 7,2% in 2020 and the high unemployment rate of 30.1%, it is clear that South Africa's economy is struggling and that as a country we face a "Herculean task" to avoid a sovereign debt crisis by 2023. The Durban Chamber of Commerce and Industry believes there is an urgent need for economic reforms to ensure the economic recovery of South Africa and we agree with the Minister's assessment that the country needs to work hard to reduce our overall expenditure and stabilise debt. Policies and decisions of the government need to be in the best interest of the business community and more deliberate in order to encourage and empower inclusive and sustainable economic growth and development. While the risk adjusted approach is necessary, we encourage government to work with the private sector to ensure the lifting of restrictions is rational and based on empirical data and scientific facts.
Revised Fiscal Framework
The Durban Chamber of Commerce and Industry notes the revised gross revenue (from R1,43 trillion to R1,12 trillion) for the 2020/21 fiscal year. It is no surprise, given South Africa's weak economic activity and the depressed job market. We believe that lifting the ban on tobacco trade will contribute towards mitigating revenue losses.
The Durban Chamber of Commerce and Industry notes the projected debt level of 81.8% of gross domestic product (GDP). The projected shortfall in tax revenue poses a huge threat to South Africa›s fiscus. There is an urgent need for the government to limit its borrowing and reduce debt levels. The Durban Chamber urges government to proactively reduce unnecessary expenditure and re-evaluate the «limitless» loan guarantees and bailouts extended to failing state-owned enterprises (SOEs).
Driving Job Creation
The rise in unemployment has not come as a surprise. The nationwide lockdown has translated into huge losses for several businesses across various sectors of the economy, causing a spike in retrenchments and job losses due to business closures and limited/reduced economic activity. While the supplementary budget has outlined mediumterm responses, the Durban Chamber believes robust dialogues between the public and private sector need to be prioritised to ensure sustainable solutions are achieved.
The Durban Chamber supports the prioritisation of infrastructure development. Infrastructure development will catalyse inclusive and sustainable socio-economic growth and development, given its positive economic spin-offs. However, there needs to be strong publicprivate partnerships to yield positive results.
For more information, visit www.durbanchamber.co.za
Nigel Ward - Comment on 2020 supplementary budget speech.pdf
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