2018 MTBPS Under the Spotlight

National Treasury

Government is to focus on reforms that support growth, stabilise state institutions, and improve service delivery going forward.

National treasury emphasized this while providing responses in parliament to public hearings on the 2018 Medium Term Budget Policy Statement.

Treasury added that faster economic growth and job creation was needed to expand public resources.

Treasury also pointed out that, despite the emergence of spending pressures, the expenditure ceiling remains intact as the “anchor of fiscal policy”.

Key fiscal risks identified include “weak economic growth, uncertainty in the revenue outlook and the poor financial position of state-owned companies”.

Treasury stressed that a fiscal anchor is only as good as a government’s ability to manage fiscal pressures.

More effective and targeted government spending programmes will be the best mitigating action that can be taken in terms of the VAT increase.

Treasury also declared that improvements in enforcement will be the key strategy to reducing illicit tobacco and improving excise duty revenue.

The Financial and Fiscal Commission also briefed parliament on the 2018 MTBPS.

Recommendations included addressing of structural bottlenecks in order to boost growth; building fiscal space via conservative debt levels and managing diversion to debt service costs; value for money must be sought more resolutely in the public sector to ensure real productivity; new approach of “costing” its functions and performance with empirical data should be adopted by government; a thorough and comprehensive rethink of the local government fiscal framework is necessary, including the governance and institutional regimes in the sector and government needs to develop a much clearer plan for implementing the comprehensive fee-free higher education policy.

Sabinet Cape Town Office