Too late to avert 44% debt – Treasury
It is too late for South Africa to prevent national debt reaching 44% of GDP within the next two years, finance director general Lungisa Fuzile said on Thursday.
"We are too close to 2016," he said after a Treasury briefing to Parliament's finance committees, a day after Minister Pravin Gordhan tabled the 2014/15 budget.
He told MPs that Treasury did not set debt ceilings, but sought to contain debt by stimulating the economy with specific interventions designed to speed up growth.
"Debt as a percentage of GDP is not something we target."
Fuzile said Treasury believed the necessary steps to achieve this included addressing the electricity generation shortfall and cutting red tape hampering the mining sector.
Government was aware that it was now imperative to "do the things set out in the NDP" (National Development Plan) and to "deal with some of the regulatory impediments to growth" notably by streamlining applications for mining licences.
"If you get that right and several other things that trigger growth then you get a bigger GDP, your denominator favours you in terms of that 44%, you get bigger revenues which means you borrow less," he said.
"At the heart of this is us as a country being able to achieve growth and we have a plan for it. It is beginning now to translate into some granular stuff closer to the ground... and we are confident that we will achieve this."
National debt had risen from a low of 27.3% of GDP in 2008/09 to 41.8% in 2012/13.
Gordhan said he hoped his budget speech had settled any questions about government's commitment to implement the NDP, and that South Africa was on the right fiscal road.
"We are convinced that we are running a safe and stable fiscal ship," he told MPs, adding that there was no cause for concern about the trajectory Treasury was steering.
Gordhan added, however, that the economy needed "different types of building blocks and... funding for them over the next three years" to create growth and jobs.
He reiterated that the black population remained too excluded from the economy.
"Black participation in our economy is too limited, it needs to increase, and we need to all make efforts to increase entrepreneurship in our society, the number of small businesses in our society, increase competition in our society, but most importantly make our economy more agile to seize opportunities that are before us."
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