It is clear that the Finance Minister has hit the brakes on spending.

Only time will tell whether he will have the support from his alliance partners.

He was brave to do it, but had no choice because of the expediency allowed since 2008 by the Zuma administration on spending.

The recognition that we had run out of fiscal space is timeous. However tough times lay ahead for South Africans and if Departments, provinces and Local government is not embracing this statement by the Treasury we are heading for troubled and conflicting times.

South Africans must realise that the only way to reclaim confidence  is through tough fiscal measures- only the foreign direct investments and domestic investments will return and assist our growth rate. The emphasise on the NDP is good news and hopefully shows that this initiative has firmly rooted itself in Government. This is clearly a victory for the moderate thinkers within Government.

MTBPS – Reaction by COPE
• We welcome the emphasis on the NDP and the fact that it will be the foundation and point of departure.
• We welcome the disciplined spending trajectory partially through a budget deficit of 4,5% of GDP in 20/3/14 reducing to 3,1% in 2015 /16.  The increase of the deficit for this year to 4,8% is a concern, but expected. It is lower than the 5% many economists forecasted.
• We welcome the new steps to combat waste, inefficiency, and corruption, but would like to see more details.  This is rhetoric and thus we do not see the difference. ,We want to see action.
• The Growth Rate of 2.5% is down on last year, as expected, but Government must take full responsibility for this due to a lack of leadership allowing SA to be downgraded  and business confidence slipping.  The current account deficit of 5.9% is too high and it will remain high for the next three years – in contrast to 2011 when it was just over 3%.  We are lagging behind other countries in Africa in this regard.
• We welcome the commitment to prudent fiscal management and we support that inflation targeting must provide a solid foundation.
• The Minister is too vague on what to do, to improve confidence in the Economy.  We need vision, detail, action and follow-up!
• We welcome that spending growth will be contained over the medium term.  The stabilizing of Public debt in 2015-16 must be a priority and it cannot be deferred again.  We are sailing very close to the wind.
• Our debt to GDP ratio was greater than those of emerging markets and is hurting us now.  We should subject spending plans to vigorous scrutiny to avoid increasing our debt levels.  Rebuilding of fiscal space depends on stabilizing the level of public debt.  We should remain vigilant in this regard.  R89bn + next year.  Debt servicing cost is now at R114bn.  it is a huge strain on our resources and state debt remains enemy number one.
• Spending by Govt has doubted in the last years with no real improvement in service delivery – this is a concern.  It is good news that the fiscus will not increase available funds beyond 2012 budget baseline.
• Major concern is the state of the ordinary South Africans and the unemployed.  High fuel + food prices and the alarmingly high figure of unsecured loans of R380bn are pushing South Africans to borrow more to survive. This is a major concern.  Consumer indebtedness stands at 76% gross disposable income.  The announcement that financial sector regulations will investigate these matters must be welcomed.
• The manufacturing export growth is not responding (it might assist if it expands) but will hit ordinary S.A. hard on energy + food prices.
• The stabilizing of CPI inflation is welcomed but the 9% price inflation for food next year is not good news for the consumer and households.
• The recognition by the Treasury that SA does not have ample fiscal space cannot come at a better time.*
• The Good news (money wise) in this Statement.
1. R80.7m for combating Rhino Poaching
2. R63m for combating anti piracy operations
3. More money for the revitalization of hospital and support for HIV and AIDS programmes
4. Additional support to combat wastage of water.
5. The turning around of Public Works the cost of that over the MTEF period is R400m.  We shall monitor this closely to see results.