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Ramaphosa: Budget plans ‘leave no one behind’

In his weekly letter to the nation, President Cyril Ramaphosa explained how the fiscal speech strengthened the State of the Nation Address (Sona) plans to grow the economy and create jobs.

The Covid-19 pandemic has resulted in significantly more money being spent, and far less being pumped back into the economy. As a result, money had to be borrowed to plug gaps in the economy, “at a higher cost”.

“As I said in Sona, the only way out of this plight is to grow the economy. And the most effective way to sustainably reduce poverty and hunger is through job creation.

“Therefore, the pursuit of growth and jobs is central to the program outlined in both Sona and the budget,” Ramaphosa said.

The measures announced during Finance Minister Enoch Godongwana’s budget speech aim to support the creation of new businesses to create jobs, improve access to basic services and unleash the business potential to get South Africans back on track. to get a leg.

“With this budget, we are now on track to reduce our budget deficit – and thus our borrowing needs – while responding to the challenges South Africans face now and in the future.”

Read his full letter below.

Dear fellow South African,

Last week, Finance Minister Enoch Godongwana presented a budget that supports and strengthens the program of action I announced in the State of the Nation Address (SONA) to grow the economy and create jobs.

The budget details how the government plans to raise money and where it will spend that money to improve the lives of South Africans.

Few South Africans need to be reminded of how devastating the COVID-19 pandemic has been to our economy. Despite the massive economic and social support package we introduced in 2020, companies have gone bankrupt and as many as two million people have lost their jobs.

Only the increase in social benefits has saved many households from hunger. As the pandemic has ravaged the economy, it has also further deteriorated the country’s financial position.

At the height of the pandemic, less revenue was raised and more money had to be spent on strengthening our health response and providing social support. As a result, the country had to borrow more at a higher cost. The pandemic followed a decade of massive increases in government spending, even as economic growth remained low.

One of the main tasks of this administration has been to restore soundness to our public finances so that the government can fulfill its role effectively. As I said in SONA, the only way out of this plight is to grow the economy. And the most effective way to sustainably reduce poverty and hunger is through job creation.

That is why the pursuit of growth and employment is at the heart of the program contained in both SONA and the budget. This program includes far-reaching economic reforms that promote investment and growth.

These reforms will ensure that our country has enough affordable electricity to meet growing demand, that our ports and rail lines are more efficient, that we improve access to faster, cheaper broadband, that homes and businesses have the water they need. , and that we attract the skills and investment we need to create a productive and dynamic economy.

At a time when public resources are limited, these reforms will allow for more private investment in the vital infrastructure our economy needs to grow. This is happening alongside a revised framework for public-private partnerships and innovative new ways to combine public and private resources for infrastructure investment. We will do this in a way that improves the performance and financial position of key state-owned companies.

This will put these companies in a much better position to fulfill their development mandates, while ensuring that critical national infrastructure remains firmly in the hands of the state.

To support this work, R17.5 billion has been allocated in the budget for catalytic infrastructure projects over the next three years. This supports, among other things, the upgrading of roads, bridges, water and sewerage, transport, schools, hospitals and clinics.

The budget supports the efforts announced in SONA to unleash the potential of small, micro and informal businesses. For example, R15 billion has been earmarked for a redesigned loan guarantee scheme that will make it easier for small businesses to access financing to “come back” from the effects of the pandemic.

The Employment Tax Incentive, which has been so successful in getting many young people their first job, is expanding to encourage small businesses to hire more people. The budget recognizes the importance of basic services for quality of life as well as for investment and business activities and significantly increases the allocation for services.

For example, it adds an additional EUR 30.7 billion to local government allocations for basic municipal services. All these measures stimulate the growth and expansion of companies and support the creation of new companies to create new jobs.

However, these efforts will take some time to accommodate the millions of South Africans looking for work. That’s why we expanded the Presidential Employment Stimulus, which provided more than 800,000 people with jobs and livelihoods in its first 16 months.

An additional R18.4 billion has been allocated over the next two years, so that the incentive can continue to provide vital income, skills development and work experience to hundreds of thousands of unemployed, mainly young people.

The budget also supports the extension of the R350 Social Relief of Distress Grant for another year. This will provide basic support for approximately 10 million unemployed beneficiaries seeking employment. This subsidy significantly expands the country’s social safety net, with about 46% of the population receiving subsidies.

In short, this is a budget that no one wants to leave behind. Even with our dire fiscal stance, the budget is directing resources to areas with the greatest potential for growth and jobs, especially structural reforms, infrastructure and support for small businesses.

At the same time, it supports young people through public and social employment programs and extends social protection for the most vulnerable. While it promotes growth, the budget also outlines a clear path to sustainable public debt levels. The interest we pay on our debt exceeds our growth rate, creating the risk of debt spiraling out of control if not managed carefully.

Our country now spends more on debt service costs than on health care, primary education and policing. Unsustainable debt is bad for all South Africans, but especially for the poor. The cost of debt reduces the amount of money the government has to improve services, provide social protection, and invest in social and economic infrastructure.

With this budget, we are now on track to reduce our budget deficit – and thereby our financing needs – while responding to the challenges South Africans face now and in the future.

The budget shows our ability and commitment to achieve this balance. It’s a difficult balance to achieve, but with a more efficient use of resources, an end to waste and corruption, and shifting spending from consumption to investment, we can achieve fiscal sustainability while continuing to support growth.

The road to recovery for our country is steep and will be extremely challenging.

But with the measures we set out in SONA, with the budget presented and with the cooperation and involvement of all South Africans, we will succeed.

Yours sincerely,

Cyril Ramaphosa

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