/ MEDIA STATEMENT / The content on this page is not written by Polity.org.za, but is supplied by third parties. This content does not constitute news reporting by Polity.org.za.

The Federation of Unions of South Africa cautiously welcomes the tabling of the Medium-Term Budget Policy Statement, with the hope that the continued decline of the economy and the loud alarm bells will light a fire under the feet of government leaders. The emphasis by Finance Minister Enoch Godongwana that gross government debt is expected to stabilise at 77 percent of the Gross Domestic Product by 2025/26, exceeding the February forecast is chilling. While the Minister outlined government’s strategy to avoid a full-blown fiscal crisis and systemic risks to the economy, we are concerned that although a focus is now firmly of structural reform as we demanded, those responsible for its implementation cannot be trusted as the nation has been here before. FEDUSA has also noted that government missed its revenue target by almost R57 billion, with future projections painting a bleak picture. Revenue collection has been a strength of the government amid other difficulties, we are concerned that this is the reality we are confronted with.

It has been 8 months since President Cyril Ramaphosa announced during the State of the Nation Address this year, that action was being taken to review and reconfigure the structure and size of the state with the aim to cut spending. We agree that the reconfiguration is necessary to cut government spending and create a more efficient state and have called for this intervention, however, the slow pace of the formulation of the plan to do so, is discouraging. 

FEDUSA understands the need to cut down spending, as revised down by R21 billion this financial year, R64 billion in 2024/25 and R69 billion, the year after. These proposals came as no surprise as government had been open about the intention to cut spending. However, we disagree with the approach which seeks to apportion the responsibility for these savings to government departments through the cost-containment guidelines issued by the National Treasury some weeks ago. 

The federation is also satisfied with the pro-active decision to allocate R1,6 billion for disaster relief. There have been many disasters, due to inclement weather, and we are relieved that the government has sought to prepare in advance its response mechanisms which need adequate funding to be realised. In the same breath, we welcome the announcement that National Treasury is making progress in its development of a disaster financing strategy to enhance existing risk financing instruments to address risks posed by climate change. The FEDUSA climate change and just transition policy spells out how South Africa should not be consumed by shrinking certain economic activities and technologies that pose a risk to the climate and economy, that we lose sight of the imperative to hatch and grow a labour intensive and climate-smart economy. 

On local government and municipalities, we welcome the announcement that changes are being made to conditional grants, including the urban settlement development grant and municipal infrastructure grant. FEDUSA called for this very action in its expectations statement ahead of the MTBPS. We also welcome the commitment to develop new funding models. We also noted the announcement that a plan is in motion to address the burden of municipalities which owe Eskom close to R57 billion, with 67 of them having submitted debt relief applications last month. The reiteration that pre-paid metres, for example, must be installed for users as a part of the plan to rekindle the culture of paying for services rendered is welcomed. 

FEDUSA also welcomes the Eskom debt relief amendment bill which was tabled today (Wednesday). FEDUSA agrees that Eskom’s debt must be reduced, and we welcome the explanation that this will be conducted in line with the conditions that were set out by the National Treasury.

On Transnet, we agree with the Minister, that no modern economy can thrive and grow new industries if rail is not functional. Ahead of the MTBPS presentation, FEDUSA called for an intervention at Transnet, while acknowledging that it is the backbone of the economy. Its dysfunction was influenced by several factors over the years until the recent reality where it has been unable to efficiently handle cargo. The federation is relieved that government recognises the seriousness of the situation and will work with Transnet and the Department of Public Enterprises to ensure the state-owned entity meets its immediate debt obligations. FEDUSA also eagerly awaits the details of the Infrastructure Finance and Implementation Support Agency to deal with private-public financing of public infrastructure programmes which the National Treasury said was in the process of being established. 

FEDUSA also welcomes the announcement that government is working to address deficiencies in the fight against organised crime and illegal financial flows. While we have heard this before, the greylisting of South Africa by the Financial Action Task Force has invited urgency to the task. We hope to hear more details when the Minister tables the national budget in 2024.

Issued by FEDUSA