Durban Chamber of Commerce comments on supplementary budget
Nigel Ward has described the country's attempts to avoid a sovereign debt crisis by 2023 as as "Herculean task".
THE Durban Chamber of Commerce and Industry president, Nigel Ward has described the country’s attempts to avoid a sovereign debt crisis by 2023 as as “Herculean task”.
Ward was commenting on the 2020 Supplementary Budget Speech delivered by Tito Titus Mboweni, Minister of Finance of the Republic of South Africa, on Wednesday, 24 June.
Ward said with the country’s economy expected to contract by 7,2 per cent in 2020, combined with the high unemployment rate of 30.1 per cent, it was clear that South Africa’s economy is struggling.
“The Durban Chamber believes there is an urgent need for economic reforms to ensure the economic recovery of South Africa. We agree with the Minister’s assessment that the country needs to work hard to reduce our overall expenditure and stabilise debt,” he said.
He called for policies and decisions of the government to be in the best interest of the business community and more deliberate in order to encourage and empower inclusive and sustainable economic growth and development.
“While the risk-adjusted approach is necessary, we encourage government to work with the private sector to ensure the lifting of restrictions is rational and based on empirical data and scientific facts,” he said.
Ward said the Durban Chamber of Commerce and Industry noted the revised gross revenue (from R1,43 trillion to R1,12 trillion) for the 2020/21 fiscal year and said this came as no surprise, given South Africa’s weak economic activity and the depressed job market.
“We believe that lifting the ban on tobacco trade will contribute towards mitigating revenue losses,” said Ward.
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Regarding the debt-GDP ratio, the Chamber noted the projected debt level of 81.8 per cent of gross domestic product (GDP), and said the projected shortfall in tax revenue posed a huge threat to South Africa’s fiscus.
“There is an urgent need for the government to limit its borrowing and reduce debt levels. The Durban Chamber urges government to proactively reduce unnecessary expenditure and re-evaluate the ‘limitless’ loan guarantees and bailouts extended to failing state-owned enterprises,” said Ward.
He said the rise in unemployment had not come as a surprise and the nationwide lockdown translated into huge losses for several businesses across various sectors of the economy, causing a spike in retrenchments and job losses due to business closures and limited/reduced economic activity.
“While the supplementary budget has outlined medium-term responses, the Durban Chamber believes robust dialogues between the public and private sector need to be prioritised to ensure sustainable solutions are achieved,” he commented.
Regarding infrastructure, Ward said the Durban Chamber supported the prioritisation of infrastructure development.
“Infrastructure development will catalyse inclusive and sustainable socio-economic growth and development, given its positive economic spin-offs. However, there needs to be strong public-private partnerships to yield positive results,” he concluded.
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