Budget Statement – MTBPS 2010 – Determining the limits of what’s possible

South Africa has the most transparent and accountable government budget according to a global survey of 94 countries, in the Open Budget Index of 2010. SA’s finance minister, Pravin Gordhan recognised in his Budget Statement (MTBPS) that this accolade comes from years of commitment to building a system of transparency and accountability.
South African budget policy has become reasonably predictable, which means our economic policy is stable. So there weren’t too many surprises in the MTBPS.

Job creation is high on the agenda of government and civil society – concerned about how to stimulate GDP growth in the current economic climate. The Budget Statement was a commitment  to ‘normalisation’ of public finances, in recognising the balance between growing GDP and curbing government expenditure.

The next few years are likely to see attention on the following features:
  1. Given the social challenges South Africa faces and the always limited budget resources, issues of accountability and participation are crucial, as they encourage effective use of public resources.
  2. There is likely to be continued tension between government budgets and the preferences of the political left. The 2010 MTBPS is fairly conservative in its insistence on faster deficit reduction as the best use for likely moderate revenue overruns; and its pragmatic approach to measures to intervene in the currency markets may not be seen as interventionist enough. Also, while the MTBPS affirms basic commitment to national health insurance (NHI), the Minister also re-iterated that deliberation about the subject still needed to take place.
The MTBPS did not contain much more detail on the so-called ‘new growth path’ approved by cabinet, which was unveiled the day before and which is intended to create 5 million jobs over the next ten years, thus reducing the unemployment rate from around 25% to around 15%. This is not surprising, given that the detail still needs to be worked out.
See the full analysis here.

Download the Minister’s full speech here.

 

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