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· Ahead of the Medium-Term Budget Policy Statement (MTBPS) on Wednesday (tomorrow),Business Leadership South Africa (BLSA) has written an open letter to finance minister Tito Mboweni and Treasury
· Increased business activities, BLSA said, can lead to more revenue that can support government expenditure
· The group also cautioned about various risks – including banking sector disruptions and high cost of borrowing, which can make investments and job creation difficult
Ahead of the Medium-Term Budget Policy Statement (MTBPS) on Wednesday (tomorrow),Business Leadership South Africa (BLSA) has written an open letter to finance minister Tito Mboweni and Treasury .BLSA urged the government to create ‘the most conducive environment’ that can lead accelerated growth in output in the country.
Increased business activities, BLSA said, can lead to more revenue that can support government expenditure. The group also cautioned about various risks – including banking sector disruptions and high cost of borrowing, which can make investments and job creation difficult. The organization suggested a tough but pragmatic approach focused on revenue collection efficiency, meaningful restraint on the public sector wage bill and priority given to necessary social and recovery spending.
It also suggested a step towards stabilizing debt levels as a share of the GDP. To keep the expenditure under tight leash, the BLSA said that the wage bill must be reduced to 10.5% of GDP from the present 14.2%. The priority spending should be confined to healthcare and education. There is also the need for revamping working of public utilities like Escom to prune unproductive expenditures.
Mentioning that the economy should not be micro managed, the BLSA report said that the government must understand where it did not have the capacity and wherewithal to steady the economy. Such areas should be left to the private sector.
Regarding the Government’s infrastructure push, the report said that there should be active participation of the private sector for achieving the desired results, particularly for such projects, which are bankable. The banks and asset managing companies in the private sector are ready to fund such projects, if returns on capital are assured.
The report also highlighted the role of the private sector in the energy sector and assured that it could set up projects for captive use or feeding to the grid managed by an Independent Transmission System Market Operator. It also suggested more proactive scheme for skilling the people to suit the requirements of businesses.
