IN FULL | Godongwana delivers medium-term budget in 'unprecedented conditions'

• Published date: 11 November 2021
• Author: TimesLIVE
• Publication title: SowetanLIVE (Johannesburg, South Africa)

Below is his full speech, as provided to journalists and delivered before the National Assembly. It has not been edited.

MediumTerm Budget Policy Statement, as delivered by finance minister Enoch Godongwana

Madam speaker, his excellency, President Cyril Ramaphosa, the deputy president David Mabuza, cabinet colleagues, members of the executive committees for finance in the various provinces, the governor of the South African Reserve Bank, the commissioner of the SA Revenue Service, honourable members, the people of South Africa:

I am honoured to table the following documents before this House:

* the 2021 Division of Revenue Amendment Bill;

* the 2021 Adjustments Appropriation Bill;

* the 2021 Rates and Monetary Amounts and Amendment of Revenue Laws Bill;

* the 2021 Taxation Laws Amendment Bill;

* the 2021 Tax Administration Laws Amendment Bill;

* the Revised Fiscal Framework

* the 2021 Adjusted Estimates of National Expenditure; and

* the 2021 MediumTerm Budget Policy Statement.

Introduction

Madam speaker, we are tabling the 2021 MTBPS under unprecedented conditions. The Covid19 crisis has caused severe disruptions to economies the world over. It has forced governments to pay even greater attention to the tasks of saving lives and preserving livelihoods. In addition to the high cost to human life, the crisis is likely to leave deep and longlasting scars on the global economy.

The scarring impact of the crisis is evident in increased debt levels, income vulnerabilities; while unemployment, poverty and inequality are deepening.

This is a crisis like no other.

Almost four months ago, in certain parts of our country, we witnessed disturbing incidents of violence and destruction of property never seen in postapartheid South Africa. Once again, lives were lost and people's livelihoods were taken away. Infrastructure was destroyed, investor confidence was battered and our economic prospects were dealt a severe blow.

These incidents exposed the fragility of South Africa's social, economic and political compact. They reminded us of the ease with which the plight of the poor and unemployed can be exploited to achieve political ends.

I wish to take this moment, madam speaker and honourable members, to pay tribute to the resilience of the people of South Africa during these hard and trying times. We are a resilient and dynamic people. On many occasions, when faced with extreme difficulties, we have always managed to emerge even stronger.

On the 1st of this month, our country held its sixth democratic local government elections. Yet again, our people responded to the Freedom Charter's clarion call that "The People shall govern".

They understood that, as the Freedom Charter declared: "No government can justly claim authority unless it is based on the will of the People."

The economic environment

Global outlook

Madam speaker, amid the Covid19 pandemic, global economic recovery is continuing. However, higher and more persistent inflation as well as the outlook for commodity prices have brought with them uncertainty about mediumterm global economic growth.

The global economy is projected to grow 5.9 percent in 2021 and 4.9 percent in 2022.

Advanced economies are expected to return to prepandemic expectations for growth in 2022, while emerging markets and developing economies, are expected to remain below prepandemic projections.

Notably, growth has recovered faster than employment.

Domestic outlook

In the first half of 2021, the economy recovered more quickly than expected, reflecting less stringent Covid19 restrictions, along with lower interest rates, support from strong international demand and higher commodity prices.

We now expect the South African economy to grow by 5.1 percent in 2021, from a 6.4 percent contraction in 2020.

Over the next three years the growth of the local economy is expected to average 1.7 percent, reflecting some structural weaknesses such as inadequate electricity supply.

Madam speaker, the strength of South Africa's economic recovery will also depend on the rollout of vaccines. A higher take up of vaccines will reduce the risks of future waves of the pandemic and associated disruptions to economic activity. The speed and scale of vaccination, therefore, is of the essence — there should be no room for hesitancy.

The 2021 MTBPS core message

Madam speaker, this year marks the 25th MTBPS to be tabled in this house. We have indeed come a long way in improving transparency and credibility of our budgeting processes.

The 2021 MediumTerm Budget Policy Statement is about navigating SA's path to economic and social recovery, drawing on the resilience of her people as well as restoring the sustainability of our public finances and the dignity of our people in the face of a onceinalifetime pandemic.

The MTBPS charts a course that demonstrates government's unflinching commitment to fiscal sustainability, enabling longterm growth by narrowing the budget deficit and stabilising debt.

Critical to the fiscal path we have chosen is the need to be clear and unambiguous on the tradeoffs we are willing to make as a nation. We cannot do everything we want at the same time.

Equally important is the faster implementation of structural reforms to unlock greater private sector investment, economic growth and job creation.

A fastgrowing economy will allow for greater revenue collection, making it possible for more comprehensive responses to the challenges we face.

Igniting growth

Madam speaker, considering the economic outlook and the risks associated with it, it is critical that we accelerate economic reforms for longrun growth. These reforms should focus on improving competitiveness, productivity, investment and employment.

Our first and immediate task, in this regard, must be to ensure stable energy supply, reduce the risk of loadshedding and...