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SA to continue fiscal sustainability – Gordhan

5th June 2009

By: Sapa

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Finance Minister Pravin Gordhan on Friday pledged to continue ensuring fiscal sustainability and crack down even harder on corruption.

Speaking in the National Assembly during debate on President Jacob Zuma's State of the Nation address, Gordhan said that foremost among government's responses to the global economic crisis was the R787-billion infrastructure investment programme.

"In general, the major projects are on track and being funded," he said.

National Treasury was working with Eskom, Transnet, the National Roads Agency and water authorities to ensure they could borrow the required funds in the capital market, with support where necessary.

"Our approach will continue to ensure fiscal sustainability. We will find creative ways of funding government's programme. We are determined to root out corruption and inefficiencies.

"We will ensure that government gets value for the money it spends.

"We will create better synergies and effective partnerships both within government and with other stakeholders," Gordhan said.

Treasury was also working with other departments to implement recommendations made by the Joint Presidential Economic Working Group in response to the global economic crisis.

"We have also identified the need for strategic alignment between State-owned enterprises and development finance institutions to maximise capital investment in the domestic economy."

The capital resources and delivery mandates of development finance institutions would be better co-ordinated to facilitate and give impetus to the development programmes in the economy.

Better alignment of these institutions with government's strategic priorities would strengthen the developmental agenda.

"In the course of this year, I will table proposals to a committee of Ministers overseeing our development finance institutions to consider how we can draw private sector financial institutions into appropriate co-financing and risk sharing arrangements, in support of infrastructure investment and broader access to credit," he said.

Over the past decade, considerable progress had been made in improving the tax system and broadening the tax base, and as at May 31, there had been a 10% increase in the number of tax compliant employers, demonstrating that even in the face of the crisis more companies were willing to do business legally.

"The SARS [South African Revenue Service] will intensify its efforts to detect and contest non-compliance.

"It is imperative that we deal with all forms of leakage from the State, especially at a time when every cent needs to be properly used for its intended purpose.

"Accordingly, the National Treasury will establish a unit to monitor and investigate corruption in public procurement processes.

"It will focus on both government employees and private sector involvement in these crimes," Gordhan said.

Government would also work towards a more integrated social security system that encouraged savings and broadened the coverage of risk benefits.

Of particular importance was the approach taken to financing health services.

"We have to find cost-effective solutions to the challenge of providing and managing health services, and we have to find better ways of working together with the private sector in building the infrastructure required, managing services and training professional staff.

A task team had been set up at Treasury to work with health officials to explore models for broadening public-private partnerships in the health sector, he said.

South Africa was fortunate that its fiscal position was strong, public debt moderate, and the foreign reserve position of the South African Reserve Bank in good health.

"These are considerable blessings, owing in large measure to the foresight and wisdom of my predecessor [Trevor Manuel]."

These strengths meant the expanding infrastructure investment programme and the broad-based social assistance programmes provided for in the national budget could continue.

"These are fiscal strengths, to which we should add the technological and financial capability of the South African business sector, and the collective vision and mobilising power of organised labour and civil society.

"To these formidable strengths... we can surely add the great disciplines of modernising societies - hard work, a culture of savings, respect for social institutions and shared family values, nurture of the land and the natural environment - and payment of taxes when they are due," Gordhan said.

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