Parliament on Economic State of South Africa

The Standing and Select Committees on Finance and Appropriations held a joint meeting yesterday to discuss matters relating to the economy of the country.

The Committees were briefed by the Parliamentary Budget Office (PBO) and the World Bank. In its presentation, the Parliament Budget Office provided a pre-budget analysis of the upcoming 2016 National Budget to be delivered by the Minister of Finance while the World Bank briefed the Committee on its latest South Africa Economic Update which outlined key macroeconomic indicators of the economy under the central theme of promoting faster growth and poverty alleviation through competition.

The Committees welcomed the two presentations. However, Members of the Committees expressed concerns about the depreciating rand which has weakened sharply relative to the major emerging market currencies The rand depreciated by 18% against the US dollar, losing 8% of its value during December 2015. Specifically, the Committee remains concerned about the effect that the rand's depreciation will have on the country's estimated revenues.

The Committees indicated that tough decisions will need to be taken with regards to the fiscal framework for the 2016 Medium Term Expenditure Framework. The effect of the drought, the exchange rate and the effect of the higher education zero fees increases would add pressure on the 2016 National Budget. The Committees were of the view that all opportunities for a sustainable fiscal path will need to be explored.

The Committees noted with concern the non-inclusion of the effect that corruption has on the state's fiscal framework. The Committees was of the view that corruption placed significant fiscal pressure on the economy, and that it should be included much more explicitly in budget analysis presentations.

The Committees enquired whether...